contents · 2020. 1. 24. · bank islami pakistan limited dubai islamic bank pakistan limited js...
TRANSCRIPT
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notice to the Financial Statements
Pattern of Shareholding
Form of Proxy in English
Form of Proxy in Urdu
Other Forms
Jamma Punji
Director Report to the Members in Urdu
Notice of Annual General Meeting in Urdu
CONTENTS
Corporate Information
Mission Statement
Notice of Annual General Meeting
Six Years’ Review at a Glance
Directors’ Report to the Members
Statement of Compliance
2
3
4
6
7
8
15
Auditors’ Report to the Members
17
22
24
25
26
27
67
69
70
71
72
73
81
Chairmans’ Review
Review Report to the Member
18
CORPORATE INFORMATION
BOARD OF DIRECTORS Mr. K. Iqbal Talib ChairmanLt Col Abdul Khaliq Khan (Retd) Chief Executive / DirectorMr. Salman Hayat Noon (Non- Executive Director)Mr. Saifullah Khan Noon (Non- Executive Director)Muhammad Sohail Khokhar (Executive Director)
Muhammad Tariq Mir
(Non-
Executive / Independent Director)
Syed Ali Raza
(Non-
Executive / Independent Director)
AUDIT COMMITTEE
Muhammad Tariq Mir
Chairman
Mr. Salman Hayat Noon
Member
Syed Ali Raza
Member
HR
& R COMMITTEE
Syed Ali Raza
Chairman
Mr. Salman Hayat Noon
Member Lt Col Abdul Khaliq Khan (Retd)
Member
TECHNICAL COMMITTEE
Muhammad Tariq Mir
Chairman
Mr. Salman Hayat Noon Member
Lt Col Abdul Khaliq Khan (Retd)
Member
Syed Ali Raza
Member
MANAGEMENT
Lt Col Abdul Khaliq Khan (Retd)
Chief Executive
Muhammad Sohail Khokhar
Executive Director
Mr. Rizwan Sohail (FCA)
Chief Financial Officer
COMPANY SECRETARY Syed Anwar Ali
AUDITORS Shinewing Hameed Chaudhri & Co.,
Chartered Accountants
HEAD INTERNAL AUDIT
Muhammad Ashfaq
(FCMA)
LEGAL ADVISERS
Hassan & Hassan (Advocates)
BANKERS Al Baraka Bank (Pakistan) LimitedAskari Bank LimitedBank Alfalah Limited – Islamic BankingBank Islami Pakistan LimitedDubai Islamic Bank Pakistan LimitedJS Bank LimitedMCB Bank Limited
Standard Chartered Bank (Pakistan) LimitedUnited Bank Limited
HEAD OFFICE 4- Sarwar Road,Lahore Cantt.Tel. # (042) 36655777
Fax # (042) 36662244
REGISTERED OFFICE
66-Garden Block,
New Garden
Town,
Lahore.
Tel. (042) 35831462-3, E-mail: [email protected], [email protected]
SHARE REGISTRAR
Corplink (Pvt.) Limited
Wings Arcade, 1-K Commercial,
Model Town, Lahore.
Tel. # (042) 35839182, 35916714, 35916719Fax # (042) 35869037, E-mail: [email protected]: www.corplink.com.pk
MILLS Bhalwal, District Sargodha.
WEBSITE www.noonsugar.com
“Noon Sugar Mills Limited is committed to continue
its sustained efforts towards optimizing its resources
through updated technology, staff motivation and
good corporate governance so as to Insha Allah
maintain its tradition of high yield and handsome
returns to its shareholders on their investment
in the Company.”
MISSION
STATEMENT
NOON SUGAR MILLS LIMITED
NOTICE OF ANNUAL GENERAL MEETINGthNotice is hereby given that 57 Annual General Meeting of Noon Sugar Mills Limited will be held on Saturday, January 25,
2020 at 11:30 a.m. at 66 Garden Block, New Garden Town, Lahore to transact the following business:
1. To confirm the minutes of the Annual General Meeting held on January 26, 2019.
2. To receive, consider and adopt the audited accounts for the year ended September 30, 2019 and the reports of the directors and auditors thereon.
3. To approve payment of Dividend. The Board has recommended dividend @ Rs. 3.00 per share (30% ).
4. To appoint auditors for the year ending September 30, 2020 and to fix their remuneration.
5. To transact any other business as may be placed before the meeting with the permission of the Chairman.
CLOSURE OF SHARE TRANSFER BOOKS
The Share Transfer Books of the Company will remain closed from January 18, 2020 to January 25, 2020 (both days inclusive) for holding the Annual General Meeting and to determine entitlement of Dividend. The Share(s) transfer requests received up to close of business on January 17, 2020 shall entitle the transferees to receive the aforesaid Dividend.
By Order of the Board
SYED ANWAR ALI
Lahore: December 23, 2019 Company Secretary
Registered Office: 66 Garden Block, New Garden Town, Lahore.
NOTES:
1. A member eligible to attend and vote at this meeting may appoint another member as his/her proxy to attend, speak and vote on his/her behalf. Proxies in order to be effective must be received by the Company at the registered office duly stamped and signed not later than forty eight (48) hours before the time for holding the meeting. A member cannot appoint more than one proxy. Attested copy of CNIC must be attached with the proxy form.
2. CDC account holders are required to follow under mentioned guidelines laid down by Securities and Exchange Commission of Pakistan.
(1) For attending the meeting:
(i ) in case of individuals the account holders or sub-account holder shall authenticate his/her identity by i
showing his/her original computerized National Identity Card (CNIC) or original passport at the time of
attending the meeting.
(ii) In case of Corporate entity, the Board of Directors' resolution/power of attorney with specimen signature
of the nominee shall be produced at the time of meeting.
By Order of the Board
SYED ANWAR ALI Lahore : December 23, 2019 Company Secretary
(iii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the
proxy form.
(iv) The proxy shall produce his/her original CNIC or passport at the time of meeting.
(v) In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signature
shall be submitted to the Company along with proxy form.
3. The members having physical shares are requested to provide copies of their CNIC and to notify change in their
addresses, if any, to Company's Share Registrar i.e. M/s Corplink (Pvt) Ltd, Wings Arcade, 1-K Commercial , Model
Town, Lahore.
4. In compliance with directive of SECP, shareholders are advised to send their respective bank account detail as per
form attached enabling the Company to credit their cash dividend directly into their respective bank accounts.
5. If the Company receives consent from members holding in aggregate ten percent (10%) or more shareholding
residing at a geographical location, to participate in the meeting through video conference at least ten (10) days prior
to the date of meeting, the Company will arrange video conference facility in the city subject to availability of such
facility in the city. The Company will intimate such members regarding venue of video conference facility at least five
(5) days before the date of general meeting. Prescribed form for consent is enclosed in the annual report.
SIX YEARS' REVIEW AT A GLANCE
6
YEAR ended 30th September ................> 2019 2018 2017 2016 2015 2014Sugar Production:
Cane crushed (M.Tons) 630,929 1,008,945 1,115,492 401,084 439,402 498,954
Average sucrose recovery (%) 10.01 9.77 10.16 9.75 9.48 9.83
Sugar produced (M.Tons) 63,098 98,655 113,308 39,015 41,665 49,054
Operating period (Days) 102 121 140 86 96 99
Alcohol Production:
Molasses processed (M.Tons) 69,229 85,724 87,140 38,578 54,187 71,957
Alcohol produced (M.Tons) 14,311 17,794 17,162 9,193 12,617 17,228
Average alcohol yield (Ltrs/Ton) 258 259 246 238 233 239
Operating period (Days) 216 310 297 154 242 261
Operating results:
Sales (000' Rs.) 5,671,219 6,273,476 4,835,588 2,588,546 3,027,256 3,252,536
Cost of sales (000' Rs.) 4,805,768 5,562,171 4,263,805 2,353,460 2,902,182 3,101,236
Gross profit (000' Rs.) 865,451 711,305 571,783 235,086 125,074 151,300
Gross Profit to Net Sales (%) 15.26 11.34 11.82 9.08 4.13 4.65
Pre-tax profit/(loss) (000' Rs.) 272,332 270,184 189,947 51,781 (87,593) (100,808)
Total Comprehensive income / (loss) (000' Rs.) 229,735 207,929 142,627 39,068 (93,765) (121,968)
Net Profit/(loss) to Net Sales (%) 4.05 3.31 2.95 1.51 (3.10) (3.75)
Shareholders' Equity:
Paid up capital (000' Rs.) 165,175 165,175 165,175 165,175 165,175 165,175
Reserves & surplus (000' Rs.) 763,666 576,876 426,758 300,649 261,581 355,310
Shareholders' equity (000' Rs.) 928,841 742,051 591,933 465,824 426,756 520,485
Break-up value per share (Rupees) 56.23 44.93 35.84 28.20 25.84 31.51
Earnings per share (Rupees) 13.64 12.76 8.73 2.43 7.00 (6.72)
Return on equity (%) 24.73 28.02 24.10 8.39 (21.97) (23.43)
Financial position:
Current assets (000' Rs.) 2,719,124 2,609,533 2,865,040 687,282 607,642 762,781
Fixed capital expenditure (000' Rs.) 1,486,466 1,358,323 1,122,818 1,007,579 943,492 1,010,005
Total assets (000' Rs.) 4,211,454 3,980,149 4,002,125 1,707,653 1,553,327 1,790,805
Current liabilities (000' Rs.) 3,076,890 2,964,329 3,064,573 1,142,924 1,032,169 1,126,478
Long term debts (000' Rs.) 150,000 225,000 300,000 62,112 60,000 90,000
Total liabilities (000' Rs.) 3,282,613 3,238,098 3,410,192 1,241,829 1,126,571 1,270,320
Current ratio (%) 0.88 0.88 0.93 0.60 0.59 0.68
Debt equity ratio (%) 2.87 3.62 4.56 1.52 1.32 1.75
Dividends:
Cash (%) 30 26 35 10 0 0
Bonus Shares (%) 0 0 0 0 0 0
Total pay out (%) 30 26 35 10 0 0
7
I am pleased to present to our valued shareholders, the annual report and audited financial statement of the company, for the year ended 30th Sept. 2019.
During the current year, the country has faced many challenges for the overall economy. Having entered into another IMF program, the Govt. tightened its monetary policy. A significant increase was witnessed in interest rates, which coupled with a sharp devaluation of PKR and high inflation, caused a negative impact on the growth of industrial sector in particular and all businesses in general. Consequently, the GDP was restricted to 3.3 % against a target of 6.2% & the industrial growth remained at 1.4% against a target of 7.6%.
However, the Govt. was successful in narrowing the current account deficit by 33%, primarily by increasing the tariffs and curbing the imports.
The industry was faced by the above challenges of economic slowdown to impact their profitability. But by the blessings of Allah & through the vigilant guidance of the Board for strategic planning by the management, duly supported by the sincere effort of officers and staff, your company has achieved a net profit of Rs.225.3 million, with an improved EPS of Rs.13.64, for the year under review.
The Board is also appreciative of a major progressive step taken by the management for successful implementation of ERP, which integrates all major disciplines of controls, like cane accounts, general accounts, HR and also provision of agricultural inputs to both growers and cane development farms.
The Board members are aware of the high level of ethical and professional standards laid down in our Vision & Mission Statements which are adopted by the Company and the Board fully supports the objectives of achieving them.
The Board members have successfully brought diversity by constituting a mix of independent, non-executive and executive directors. They possess the requisite knowledge and skills to guide the Company through their individual judgments, in appropriately constituted Board Committees.
The Board is cognizant of your Company's obligation to be compliant with the listed Companies Code of Corporate Governance 2019 and Regulations under Companies Act 2017 and ensures that adequate controls and a robust system is in place for compliance of the policies and high standards are laid down for running a successful business.
The Board has completed the annual self-evaluation for the year ended Sept. 30, 2019 and I am pleased to report that the overall performance, benchmarked on the basis of criteria set for the year, have remained satisfactory. The above assessment was based on the standards set by the Board in line with the best corporate governance practices.
On behalf of the Board, I would like to thank our management, officers and the staff for their diligence in achieving the Company's objectives. I also wish to thank the financial institutions and our local & international customers for their cooperation & support.
CHAIRMAN'S REVIEW
Lahore : December 23, 2019 Mr. K. Iqbal Talib Chairman
DIRECTORS' REPORT TO THE MEMBERS
8
Dear members,
The Directors of Noon Sugar Mills Limited are pleased to present the 57th annual report and audited Financial Statements of the company and the Auditors' Report thereon, for the year ended 30 September 2019.
Financial Performance:
Your company has posted a net profit after tax of Rs.225 million in the reporting year, as compared to Rs. 211 million in the corresponding year. Net sales were Rs 5,671 million in the current reporting year against net sales of period of last Rs 6,273 million in the last year. EPS is Rs. 13.64 during the current financial year as against Rs 12.76 in the same period last year.
An Increase in Sugar prices has contributed towards improvement in operational results. However, sharp increases in markup rate, coupled with a increase in sales tax on sugar, the profitability of the sugar substantial have squeezedsegment.
The devaluation of Pak Rupee has mitigated in some measure, impact increased molasses prices during the however, the of reporting period and helped the distillery segment to maintain its operational results.
Operational Performance:
Sugar:
Your mills crushed 630,929 M.Tons of sugarcane and produced 63,098 M.Tons sugar, with an average sucrose recovery of 10.01% in 102 days operation as compared to 1,008,944 M.Tons of sugarcane crushing and 98,655 M.Tons of sugar ,production with 9.77% sucrose recovery in 121 days' operation in the corresponding period of last year.
The operational performance of Sugar segment for the year under review with comparative statistics of last year are tabulated below:
2019 2018
Operating Period Days 102 121
Cane Crushed M. Tons 630,929 1,008,944
Sugar Produced
M. Tons 63,098
98,655
Average Sucrose Recovery
% age
10.01
9.77
Molasses Recovery
% age
4.57
4.51
Molasses Produced M. Tons 28,800 45,500
2019
2018
Net Sales 5,671 6,273
Gross Profit 865 711
Operating Profit
613
522
Total Comprehensive Income 230
208
Earnings Per Share (Rupees)
13.64
12.76
Rupees in million
9
A significant reduction in sugarcane cultivated areas with a reduced crop yield has caused a marked fall in sugar production in the reporting period. The reduced sugarcane availability has unfortunately, resulted in a price war to secure cash payment for cane procurement at increased prices, fueled mainly by middle men.
We are also motivating growers to increase sugarcane cultivation by providing loan for seed and fertilizers.
Distillery:
During the reporting year, 69,229 M.Tons of molasses with a yield of 259 Ltrs/M.Ton, was processed resulting in the production of 14,311 M.Tons of industrial grade ethanol, as compared to 85,723 M.Tons of molasses with a yield of 259 Ltrs/M.Ton being processed, resulting in the production of 17,794 M.Tons of industrial grade ethanol in the previous year.
The operational performance of the Distillery segment for the year under review with comparative statistics of last year are tabulated below:
2019 2018
Operating Period Days 216 310
Molasses Processed
M. Tons
69,229 85,723
Ethanol Produced
M. Tons
14,311 17,794
Average Yield
Ltrs/M.
Ton
259 259
Molasses procurement remained a challenge due to reduce sugar production, which caused a reduction in Ethanol production. However, your management is pleased to report that the new distillery plant has proved itself as an efficient addition in our production facility.
Future Outlook:
Sugar:
Your management is well aware of the consecutive reduction in the sugarcane crop and has already taken some initiatives to overcome the said situation by the provision of fertilizer to the growers on deferred payment basis and on-field growers training to increase the sugarcane yield and to reduce harvesting losses. The recent increase in sugarcane support price will also attract the growers towards this cash crop. However, the sugar industry is looking for the Govt. to formulate a long term policy for the sugar industry to take some remedial action to mitigate the progressive increase in sugar production cost and recent increase in the sales tax on sugar sale. As an additional support to the industry, they should be allowed to take advantage of the occasional bullish trend in the export market by the Govt,'s timely decision to boost export in such situations.
Ethanol:
Another sharp increase is being witnessed in already inflated molasses price in the current crushing season. recent devaluation of Pak rupee will not be enough to mitigate the molasses procurement cost.
Despite a lower global Ethanol production forecast may result in some improvement in the export price of Ethanol. The overall trajectory of the Distillery segment does not appear to be promising when compared with the return of previous years.
Keeping in view of the difficult time ahead, your management is continuously working on various strategies to improve the operational efficiency to reduce the production cost of both products.
10
Related Parties Transaction:
Related Parties transaction are being carried out on arm’s length basis. Subsequent to the reporting period, Malik Adnan Hyat Noon has been appointed as advisor to the Board.
Corporate Social Responsibility:
Noon Sugar Mill Ltd is committed to playing an active role in supporting and working for sustainable community and social development. Corporate Social Responsibility (CSR) is integrated in its core values and is an integral part of the Company's overall mission.
Followings are few ongoing initiatives taken by NSML to full fill its corporate social responsibilities.
a. Your company is providing quality education by establishing and running a College and a modern English medium Model High School in the Employees Housing Colony, for the benefit of its employee's children and also families living in factory vicinity. The employee's children are also encouraged to pursue higher education by grant of scholarships starting from Matriculation upwards every year.
b. NSML is running a fair price shop in the housing colony for provision of household items at subsidized rates.
c. It also runs a free Dispensary in Bhalwal for the past 26 years and provides free medicines to the poor patients of adjoining housing colonies.
Compliance with the Code of Corporate Governance:
The requirement of the Code of Corporate Governance (CCG) set out by listing regulations of Pakistan Stock Exchange relevant for the year ended 30 September, 2019 have been adopted by the Company and have been fully complied with. A statement to this effect is annexed to the report.
Corporate and Financial Reporting Framework:
The financial statements together with the notes thereon have been drawn up by the management of the Company in conformity with the Companies Act, 2017 and applicable International Financial Reporting Standards (IFRS). These statements present fairly the Company's state of affairs, the results of its operations, cash flow and changes in equity.
The Board of Directors hereby declares that:
Any departure from the application of IFRS has been adequately disclosed in “Notes to the Financial Statements”;
proper books of accounts of the Company have been maintained by the Company;
appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment;
the system of internal controls is sound in design and has been effectively implemented and monitored;
there are no doubts upon the Company's ability to continue as a going concern;
there has been no material departure from the Best Practices of Corporate Governance, as detailed in the listing regulations of stock exchanges;
Nil
Nil Nil 1717 Mr. Saifullah Khan Noon
Nil3,384,6953,384,695 Mr. Salman Hayat Noon
· the key operating and financial data of last six years is annexed to this report.
· there are no statutory payments on account of taxes, duties, levies and charges which are outstanding as at 30 September, 2019 except for those disclosed in the financial statements;
· the Directors, CEO, CFO, Company Secretary and their spouses and minor children have not made any transactions in the Company's shares during the year ended 30 September, 2019; except as stated below.
· Cost of the investments of employees retirement funds are as follows:
Staff Retirement Benefits:
The company has maintained a recognized provident fund, and based on audited financial statements of funds, value of its investment is as follows:
As at 30 September, 2019 Rs. 73.590 million
As at 30 September, 2018 Rs. 83.447 million
Gratuity scheme is currently un-funded and annual provision is made on the basis of actuarial valuation to cover obligation under the scheme for all eligible employees and the details are contained in Note 10 to the audited financial statements for the year ended 30 September, 2019.
Pattern of Shareholding of the Company as on September 30, 2019 is annexed where as other related information is as follows:.
Shares held by:
Associated Companies, undertakings and related parties:
Number of shares held
1. Noon Industries (Pvt.) Limited 765,403
II. Mutual Funds: Nil
III. The Directors and their spouse and minor children:
Number of shares held
Minor Children
Nil Nil
Nil
Nil
Nil
Nil
Spouse
7,260 Nil
Nil
Nil
Nil
Own selfOwn self
26,360 26,360 11
NilNil
44
11
11
NilNil
IV.
Names of Directors
Mr. K. Iqbal Talib
Syed Ali Raza
Lt Col Abdul Khaliq Khan (Retd)
Muhammad Sohail Khokhar
Muhammad Tariq Mir
Executives:
11
12
Leave of absence was granted to the directors who could not attend the Board Meetings.
Audit Committee, its Meetings and Attendance:
An Audit Committee of the Board has been in existence since the CCG, which now comprises of two independent and one non-executive directors. The Audit Committee has its terms of reference which were approved by the Board of Directors in accordance with the guidelines provided by the listing regulations.During the year under review, Four Audit Committee Meetings were held, attendance position was as under:
Trading in Shares:
Directors, Executives
Malik Adnan Hayat Noon
Shareholders holding five percent or more voting rights:
Nil 6,000,032
Sale/Gift Purchase
1,437,480
8.70 %
Shares held Percentage
6,000,000
36.33 %
3,384,695
20.49 %
Ms. Tahia Noon
Mr. Salman Hayat Noon
EFG Private Bank (Channel Islands) Ltd.
VII.
Meeting of Board of Directors and Attendance:
During the year under review, Four meetings of the Board of Directors were held, attendance position was as under:
NAMES OF DIRECTORS
Mr. K. IqbalTalib
Malik Adnan Hayat Noon
Mr. Salman Hayat Noon
Lt Col Abdul Khaliq Khan (Retd)
Muhammad Sohail Khokhar
Muhammad Tariq Mir
Syed Ali Raza
MEETINGS ATTENDED
4
3
3
3
4 4 4
V. Public Sector Companies and Corporations, Joint Stock Companies and others:
Shares held
1,858,214
Percentage
11.25 %
Shares held
7,219
Percentage
0.0437 %
VI. Banks, Development Finance Institutions, Non-Banking Finance Companies, Insurance Companies, Takaful, Modarabas and Pension Funds
13
Number of Meetings of Shareholders:
thDuring the year under review, annual general meeting was held on 26 January, 2019.
Outstanding Statutory Payments:
All outstanding payments are of normal and routine nature.
Director's Remuneration Policy:
The Board of Directors has approved a formal policy for remuneration of executive directors depending upon their responsibility in the affairs of the Company. Remuneration of the executive directors shall be approved by the Board of Director, as recommended by the Human Resource and Remuneration Committee. The Company will not pay any remuneration to Independent Directors except fee for attending meetings of the Board and its committees.
Role of Shareholders:
The Board aims to ensure that the Company's shareholders are timely informed about the major developments affecting the Company's state of affairs. To achieve this objective, information is communicated to the shareholders through quarterly, half-yearly and annual reports, now being promptly placed on Company's website. The Board encourages the shareholders' participation at the General Meetings to ensure the desired level of accountability.
Dividend:
The Board of Directors in their meeting held on December 23, 2019 has recommended payment of final cash dividend for the year ended September 30, 2019 @ Rs.3.00 per share (30%) to all the shareholders of the company. The approval of the members for the final dividend shall be obtained at the Annual General Meeting to be held on January 25, 2020.
MEETINGS ATTENDED
4 4
4
NAMES OF DIRECTORS
Muhammad Tariq Mir
Mr. Salman Hayat Noon
Syed Ali Raza
Human Resource and Remuneration Committee:
Human Resource and Remuneration Committee was formed to monitor the procedure of selection, evaluation, compensation and succession planning of key management personnel. During the year under review, Four committee meetings were held, attendance position was as under:
MEETINGS ATTENDED
4
4 3 4
NAMES OF DIRECTORS
Syed Ali Raza
Malik Adnan Hayat Noon
Mr. Salman Hayat Noon
Lt. Col Abdul Khaliq Khan (Retd)
Lahore : December 23, 2019
For and on behalf of the Board
Chief Executive
Lt Col Abdul Khaliq Khan (Retd) M. SOHAIL KHOKHAR Director
14
Health, Safety & Environment:
The Company adheres and ensures strict compliance of internationally acceptable Health Safety and environment standard and we continue refining our processes for safer, more sustainable operations for today and tomorrow.
Auditors:
M/s Shinewing Hameed Chaudhri & Co., Chartered Accountants, the retiring auditors have offered their services for another term. The Board proposes their appointment as recommended by the Audit Committee.
Acknowledgement:
We acknowledge invaluable support from all of our stakeholders including Financial Institutions, Vendors, customers and shareholders of our Company. We take this opportunity to appreciate our employees for their commitment, dedication and round the clock efforts for the growth of the Company.
15
Name of Company: Noon Sugar Mills LimitedYear Ended: September 30, 2019
The Company has complied with the requirements of the repealed Listed Companies (Code of Corporate Governance) Regulations 2017 and Listed Companies (Code of Corporate Governance) Regulations 2019 (here-in-after referred as “Codes”) in the following manner.
1. The total numbers of directors are seven as per the following.
Names
Lt Col Abdul Khaliq Khan (Retd)Muhammad Sohail Khokhar
Mr. K. Iqbal Talib
Mr. Salman Hayat Noon Mr. Saifullah Khan Noon
Muhammad Tariq MirSyed Ali Raza
(Executive Director / CEO)(Executive Director)(Non -
Executive Director)
(Non - Executive Director)(Non - Executive Director)
(Independent Director)(Independent Director)
2. The composition of board is as follows:
a) Independent Directors 02b) Other Non Executive Directors 03c) Executive Directors 02
3. The directors have confirmed that none of them is serving as a director on more than seven listed companies,
including this company.
4. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps have been taken to disseminate it throughout the company along with its supporting policies and procedures.
5. The Board has developed a vision/ mission statement, overall corporate strategy and significant policies of the company. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.
6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken by board / shareholders as empowered by the relevant provisions of the Companies Act 2017 and the Codes.
7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose. The Board has complied with the requirements of the Companies Act 2017 and the Codes with respect to frequency, recording and circulating minutes of meetings of the board.
8. The Board of directors have a formal policy and transparent procedures for remuneration of directors in accordance with the Companies Act 2017 and the Codes.
9. The board has arranged Directors' Training program for the following during the year :
Syed Ali Raza (Independent Director)
Statement of Compliance with repealed Listed Companies (Code of Corporate Governance) Regulations, 2017 and Listed Companies
(Code of Corporate Governance) Regulations, 2019
Lahore : December 23, 2019 Mr. K. Iqbal Talib Chairman
Among the directors, three directors namely Syed Ali Raza, Muhammad Tariq Mir and Lt Col Abdul Khaliq Khan (Retd) have acquired Director Training Certification whereas Mr. K. Iqbal Talib is exempted from Director Training Certification having 14 years of education and more than 15 years of experience of Board of listed company.
10. The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit including their remuneration and terms and condition of employment and complied with relevant requirement of the Codes.
11. Mr. Saifullah Khan Noon was appointed as Director on August 23, 2019 in place of Malik Adnan Hayat Noon who resigned on August 22, 2019.
12. CFO and CEO endorsed the financial statements before approval of the board.
13. The board has formed committees comprising of members given below :
a) Audit Committee
i) Muhammad Tariq Mir Chairmanii) Mr. Salman Hayat Noon Memberiii) Syed Ali Raza Member
b) HR and Remuneration Committee
ii) Syed Ali Raza Chairmanii) Mr. Salman Hayat Noon Memberiii) Lt Col Abdul Khaliq Khan (Retd) Member
14. Term of reference of the aforesaid committees have been formed, documented and advised to the committee for compliance.
15. The frequency of the meetings of the committees were as per following:
a) Audit Committee 04 (one in each Quarter) b) HR & Remuneration Committee 04 (one in each Quarter)
16. The board has setup an effective internal audit function who is considered suitably qualified and experienced for the purpose and is conversant with the policies and the procedures of the company.
17. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP and registered with Audit Oversight Board of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.
18. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Companies Act 2017, the Codes or any other regulatory requirement and the auditors have confirmed that they have observed IFAC guidelines in this regard.
19. We confirm that all requirements of the Regulations 3, 6, 7,8,27, 32, 33 and 36 of the Listed Companies (Code of Corporate Governance) Regulations, 2019 have been complied with.
20. We confirm that all the requirements of repealed Listed Companies (Code of Corporate Governance) Regulations 2017 have been complied with.
16
17
We have reviewed the enclosed Statement of Compliance with the repealed Listed Companies (Code of Corporate Governance) Regulations, 2017 and the Listed Companies (Code of Corporate Governance) Regulations, 2019 (here-in-after referred to as ‘Regulations’), prepared by the Board of Directors of NOON SUGAR MILLS LIMITED (the Company) for the year ended September 30, 2019 in accordance with the requirements of Regulation 36 of the Listed Companies (Code of Corporate Governance) Regulations, 2019.
The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our responsibility is to review whether the Statement of Compliance reflects the status of the Company’s compliance with the provisions of the Regulations and report if it does not and to highlight any non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries of the Company’s personnel and review of various documents prepared by the Company to comply with the Regulations.
As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors’ statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company’s corporate governance procedures and risks.
The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval, its related party transactions and also ensure compliance with the requirements of section 208 of the Companies Act, 2017. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried-out procedures to assess and determine the Company’s process for identification of related parties and that whether the related party transactions were undertaken at arm’s length price or not.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the requirements contained in the Regulations as applicable to the Company for the year ended September 30, 2019.
Lahore : December 23, 2019
INDEPENDENT AUDITORS' REVIEW REPORT TO THE MEMBERS OF NOON SUGAR MILLS LIMITED
Review Report on the Statement of Compliance contained in the repealed Listed Companies
(Code of Corporate Governance) Regulations, 2017 and the Listed Companies
(Code of Corporate Governance) Regulations, 2019
Audit Engagement Partner: Mr. Osman Hameed Chaudhri
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF NOON SUGAR MILLS LIMITED
Report on the Audit of the Financial StatementsOpinion
We have audited the annexed financial statements of NOON SUGAR MILLS LIMITED (the Company), which comprise the statement of financial position as at September 30, 2019, and the statement of profit or loss and other comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of the audit.
In our opinion, and to the best of our information and according to the explanations given to us, the statement of financial position, statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan and give the information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at September 30, 2019 and of the profit and other comprehensive income, the changes in equity and its cash flows for the year then ended.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
18
S.No. Key audit matters How the matter was addressed in our audit
First time adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers’
IFRS 9 is effective to the financial statements of the Company for the first time during the current year and replaces IAS 39 ‘Financial Instruments: Recognition and Measurement’.
In relation to financial assets, IFRS 9 requires the recognition of expected credit losses (‘ECL’) rather than incurred credit losses under IAS 39 and is therefore a fundamentally different approach. ECL reflect a range of unbiased and probability-weighted outcomes, time value of money, reasonable andsupportable information based on the consideration of historical events, current conditions and forecasts of future economic conditions. The calculation of ECLs is complex and involves a number of judgemental assumptions.
IFRS 9 also introduces new classification of financial assets based on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
For IFRS 9, we reviewed and understood the requirements. Our audit procedures included the following:
- Considered the management’s process to assess the impact of adoption of IFRS 9 on the Company’s financial statements;
- Reviewed the appropriateness of the assumptions used (future and historical), the methodology and policies applied to assess the ECL in respect of financial assets of the Company. Reviewed the working of management for ECL provision; and
- Reviewed the new classification of financial assets and financial liabilities of the Company based on the revised criteria of IFRS 9.
For IFRS 15, our audit procedures included the following:
- Discussed with the management changes made in the revenue recognition criteria to comply with the requirements of new accounting standard;
1
S.No. Key audit matters How the matter was addressed in our audit
Contingencies
The Company is subject to litigations against various Government departments involving different Courts. These litigations require management to make assessment and judgement with respect to likelihood and impact of such litigations.
Management has engaged independent legal counsel on these matters.
The accounting for and disclosure of contingencies is complex and a matter of significance in our audit because of the judgement required to determine the level of certainty on these matters.
Due to high magnitude of the amounts involved, inherent uncertainties with respect to the outcome of matters and use of significant management judgement and estimates to assess the same including related financial impact, we have considered above referred contingencies as one of the key audit matters.
Refer contents of notes 15.1 to 15.12 to the financial statements.
2 In response to this matter, our audit procedures included:
- Discussing legal cases with the legal department to understand the management’s view point and obtaining and reviewing the litigation documents in order to assess the facts and circumstances;
- Obtaining independent opinion of legal advisors dealing with such cases in the form of confirmations;
- We also evaluated the legal cases in line with the requirements of IAS 37: Provisions, contingent liabilities and contingent assets;
- tested the reasonability of assumptions applied by the management in the allocation of labour and other various overhead costs to the inventories; and
- The disclosures of legal exposures and provisions were assessed for completeness and accuracy.
19
IFRS 15 is effective to the financial statements of the Company for the first time during the current year and changes the revenue recognition criteria. IFRS 15 introduces a single five-steps model for revenue recognition and establishes a comprehensive framework for recognition of revenue from contracts with customers.
In view of the above amendments, reclassifications of financial assets, assumptions involved, incorporation of new disclosures, we considered the adoption of IFRS 9 and IFRS 15 as a key audit matter.
- Obtained relevant underlying supporting documents for ensuring that management has complied with the revenue recognition criteria as introduced by IFRS 15; and
- Assessed the appropriateness of the related disclosures made by the management in the Company's financial statements.
Trade Debts
As at September 30 2019, the Company’s trade debtors were of Rs.679.756 miilion. There has been an increase of Rs.640.203 millon over the last year. No provision has been recorded for impairment in trade debts.
The Company has estimated the expected credit losses using a provision matrix where trade receivables are grouped based on different customer attributes along with historical, current and forward looking assumptions. ECL reflect a range of unbiased and probability-weighted outcomes, time value of money, reasonable and supportable information based on the consideration of historical events, current conditions and forecasts of future economic conditions. The calculation of ECLs is complex and involves a number of judgemental assumptions.
3 We performed following audit procedures:
- We obtained credit policy with respect to debtors and assess the Company's compliance of its policy;
- We sought external confirmations from the selected debtors for their balances that remained outstanding at the year end and compared replies to the request;
- We tested the accuracy of data on sample basis extracted from the Company's accounting system which is used to calculate the ageing of trade debts;
- We performed subsequent check of selected debtor balances to review recovery from debtors after the year end; and
- We assessed the reasonableness of methods used by the management to estimate that the doubtful debts are appropriate and ensured that the same is applied consistently.
20
S.No. Key audit matters How the matter was addressed in our audit
We identified the recoverability of trade debts as a key audit matter.
Refer to note 21 to the financial statements and the accounting policy in note 5.13 to the financial statements.
we assessed the appropriateness of the related disclosure made by the management in the Company's financial statements.
Information Other than the Financial Statements and Auditors' Report Thereon
Management is responsible for the other information, which comprises the information included in the Annual Report, but does not include the financial statements and our auditors' report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Board of directors is responsible for overseeing the Company’s financial reporting process.
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
21
evidence obtained upto the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
b) the statement of financial position, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company’s business; and
d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
The engagement partner on the audit resulting in this independent auditors' report is Mr. Osman Hameed Chaudhri.
Lahore : December 23, 2019
Lt Col ABDUL KHALIQ KHAN (Retd)
Chief Executive
22
NoteEquity and Liabilities
Share Capital and Reserves
Authorised capital
20,000,000 ordinary shares of Rs.10 each
Issued, subscribed and paid-up capital 6 165,175 165,175
Reserves 7 249,217 249,217
Unappropriated profits 514,449 327,659
928,841 742,051
2019 2018
--- Rupees in '000 ---
200,000 200,000
Non-Current Liabilities
Long term finance 8 150,000 225,000
Liability against assets subject to finance lease 9 9,797 4,778
Staff retirement benefits - gratuity 10 45,926 43,991
205,723 273,769
Current Liabilities
Trade and other payables 11 354,220 317,645
Contract liabilities 14,780 49,151
Accrued mark-up 12 73,118 67,948
Short term finances 13 2,402,453 2,386,078
Current portion of non-current liabilities 14 118,008 77,039
Unclaimed dividends 5,100 5,100
Unpaid dividends 2,798 1,969
Provision for taxation 106,413 59,399
3,076,890 2,964,329
3,282,613 3,238,098
Contingencies and Commitments 15
4,211,454 3,980,149
The annexed notes form an integral part of these financial statements.
Statement of Financial PositionAs at September 30, 2019
M. SOHAIL KHOKHAR Director Chief Financial Officer
RIZWAN SOHAIL
23
Note
2019 2018
---- Rupees in '000 ----Assets
Non-Current Assets
Property, plant and equipment 16 1,478,649 1,350,449
Investment property 17 7,817 7,874
Loans and advances 18 1,985 360
Security deposits 3,879 11,933
1,492,330 1,370,616
Current Assets
Stores, spares and loose tools 19 96,252 101,955
Stock-in-trade 20 1,147,288 1,997,542
Trade debts 21 679,756 39,553
Loans and advances 22 431,559 110,106
Short term prepayments 6,133 2,844
Other receivables 23 191,875 236,230
Income tax refundable, advance income
tax and tax deducted at source 107,655 75,295
Bank balances 24 58,606 46,008
2,719,124 2,609,533
The annexed notes form an integral part of these financial statements.
4,211,454 3,980,149
Statement of Financial PositionAs at September 30, 2019
Lt Col ABDUL KHALIQ KHAN (Retd) Chief Executive Chief Financial Officer
RIZWAN SOHAIL Director
M. SOHAIL KHOKHAR
24
Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended September 30, 2019
Note
Sales - net 25
Cost of sales 26
Gross profit
Distribution and marketing expenses 27
Administrative expenses 28
Other income 29
Other expenses 30
Profit from operations
Finance cost 31
Profit before taxation
Taxation 32
Profit after taxation
Other comprehensive income / (loss)
Items that will not be reclassified
subsequent to statement of profit or loss:
- gain / (loss) on remeasurement of staff retirement
benefit obligation 4,418
Total comprehensive income 229,735
Earnings per share - basic and diluted 33 13.64
The annexed notes form an integral part of these financial statements.
------- Rupees -------
2019 2018
--- Rupees in '000 ---
711,305
(104,464)
(135,209)
68,720
(18,513)
521,839
(251,655)
270,184
(59,399)
210,785
(2,856)
207,929
12.76
865,451
(106,952)
(160,456)
36,466
(21,657)
612,852
(340,520)
272,332
(47,015)
225,317
5,671,219
(4,805,768)
6,273,476
(5,562,171)
272,332 270,184
159,737 110,549
(973) (788)
- 4,170
(11,329) (302)
9,760 7,649
774 (694)
332,854 233,291
763,155 624,059
4,929 (34,267)
850,254 155,206
(640,203) 92,713
(320,950) (44,545)
(3,289) (1,442)
44,355 (179,844)
13,275 (193,434)
(51,629) (205,613)
711,526 418,446
(32,361) (40,883)
(3,149) (2,880)
676,016 374,683
(288,007) (350,523)
1,100 1,087
8,054 2,042
(2,128) (92)
(280,981) (347,486)
(37,500) (62,935)
16,375 52,423
8,488 (1,942)
(327,684) (222,285)
(42,116) (56,065)
(382,437) (290,804)
12,598 (263,607)
46,008 309,615
58,606 46,008
Cash ow from operating activities
Profit for the year before taxation
Adjustments for non-cash charges and other items:
Depreciation on property, plant & equipment and
investment property
Gain on disposal of operating fixed assets
Operating fixed assets written-off
Unclaimed and other payable balances written-back
Provision for staff retirement benefits - gratuity
Provision made / (reversed) for slow moving stores
and spares inventory
Finance cost
Profit before working capital changes
Effect on cash ow due to working capital changes
(Increase) / decrease in current assets:
Stores, spares and loose tools
Stock-in-trade
Trade debts
Loans and advances
Short term prepayments
Other receivables
Increase / (decrease) in trade and other payables
Cash generated from operations
Income tax paid
Staff retirement benefits (gratuity) - paid
Net cash generated from operating activities
Cash ow from investing activities
Additions to property, plant and equipment
Sale proceeds of operating fixed assets
Long term security deposits - net
Loans and advances - net
Net cash used in investing activities
Cash ow from financing activities
Long term finances - net
Short term finances - net
Liability against assets subject to finance lease
Finance cost paid
Dividend paid
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents - at beginning of the year
Cash and cash equivalents - at end of the year
The annexed notes form an integral part of these financial statements.
2019 2018
--- Rupees in '000 ---
25
Statement of Cash Flows For the Year Ended September 30, 2019
Lt Col ABDUL KHALIQ KHAN (Retd) Chief Executive Chief Financial Officer
RIZWAN SOHAIL Director
M. SOHAIL KHOKHAR
Lt Col ABDUL KHALIQ KHAN (Retd) Chief Executive Chief Financial Officer
RIZWAN SOHAIL Director
M. SOHAIL KHOKHAR
26
Statement of Changes in EquityFor the Year Ended September 30, 2019
Balance as at October 01, 2017 165,175 119,217 130,000 177,541 426,758 591,933
Distribution to owners
Cash dividend at the rate of Rs.3.5
per ordinary share for the year
ended September 30, 2017 -
-
-
(57,811) (57,811) (57,811)
Total comprehensive income for the
year ended September 30, 2018
Income for the year -
- - 210,785 210,785 210,785
Other comprehensive loss - - - (2,856) (2,856) (2,856)
- - - 207,929 207,929 207,929
Balance as at September 30, 2018 165,175 119,217 130,000 327,659 576,876 742,051
Distribution to owners
Cash dividend at the rate of Rs.2.6
per ordinary share for the year
ended September 30, 2018 -
- - (42,945) (42,945) (42,945)
Total comprehensive income for the
year ended September 30, 2019
Income for the year -
-
-
225,317 225,317 225,317
Other comprehensive income -
-
-
4,418 4,418 4,418
- - - 229,735 229,735 229,735
Balance as at September 30, 2019 165,175 119,217 130,000 514,449 763,666 928,841
The annexed notes form an integral part of these financial statements.
------------------- Rupees in '000 -------------------
Capital
Share
capital Sub-
total
Total
Reserves
Revenue
Un-
appropriat
ed profits
Share
premiumGeneral
1. LEGAL STATUS AND NATURE OF BUSINESS
Noon Sugar Mills Limited (the Company) was incorporated in the year 1964 as a Public Company and its shares are quoted on the Pakistan Stock Exchange. The principal activity of the Company is manufacturing and sale of white sugar and spirit.
1.1 Geographical location and addresses of major business units including mills / plant of the Company are as under:
Sargodha Purpose
Bhalwal Mills / Production plant
Lahore
4-Sarwar Road, Cantt, Head office
Karachi
1st Floor, P.I.I.A Building, Mulana Deen Muhammad Wafai Road, Marketing office
2. BASIS OF PREPARATION
2.1 Statement of compliance
These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:
- International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017;
- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; and
- Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions of and directives issued under the Companies Act, 2017 have been followed.
2.2 Basis of measurement
These financial statements have been prepared under the historical cost convention except for staff retirement benefits (gratuity) which is stated at their present value.
2.3 Functional and presentation currency
These financial statements are presented in Pak Rupees, which is the functional currency of the Company. All financial information presented in Pak Rupees has been rounded-off to the nearest thousand, unless otherwise stated.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2019
27
28
2.4 Change in accounting standards and interpretations
2.4.1 Standards, amendments to approved accounting standards effective in current year and are relevant
Standards, amendments and interpretations to IFRSs that are effective for accounting periods beginning on October 01, 2018 and are considered to be relevant and have significant effect on the Company’s operations are as follows:
(a) IFRS 15, ‘Revenue from contracts with customers’ which is effective for the annual period beginning on October 01, 2018. IFRS 15 introduces a single five-step model for revenue recognition and establishes a comprehensive framework for recognition of revenue from contracts with customers based on a core principle that an entity should recognize revenue representing the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
(b) IFRS 9, ‘Financial Instruments’: this standard has been notified by the SECP to be effective for annual periods ending on or after June 30, 2019. This standard replaces the guidance in International Accounting Standard (‘IAS’) 39, ‘Financial Instruments: Recognition and Measurement’. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment model.
(c) IFRIC 22, "Foreign currency transactions and advance consideration' applicable to accounting periods beginning on or after October 01, 2018. This interpretation clarifies the determination of the date of transaction for the exchange rate to be used on initial recognition of a related assets, expenses or income where an entity pays or receive consideration in advance for foreign currency denominated contracts. For a single payment or receipt, the date of the transaction should be the date on which an entity recognizes the non-monetary assets or liability arising from the advance consideration. If their are multiple payments or receipts for one item a date of transaction should be determined as above for each payment or receipts. The impact of the interpretation is not considered to be material on the financial statements of the Company.
2.4.2 Standards, amendments to approved accounting standards and interpretations that are not yet effective and have not been early adopted by the Company
There are certain standards, amendments to the IFRSs and interpretations that are mandatory for companies having accounting periods beginning on or after October 01, 2019 but are considered not to be relevant or to have any significant effect on the Company’s operations and are, therefore, not detailed in these financial statements, except for the following:
(a) IFRS 16, ‘Leases’ is applicable to accounting periods beginning on or after January 01, 2019. IFRS 16 will affect primarily the accounting by lessees and will result in the recognition of almost all the leases on the reporting date. This standard removes the current distinction between operating and finance leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for virtually all lease contracts. An optional exemption exists for short-term and low-value leases. The accounting by lessor will not significantly change. Some differences may arise as a result of the new guidance on the definition of lease. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has yet to assess the impact of this standard on its financial statements.
(b) IAS 23, 'Borrowing costs' is effective for accounting periods beginning on or after January 01, 2019. The
29
amendment is part of the annual improvement 2015-2017 cycle. The amendment clarifies that the general borrowings pool used to calculate eligible borrowing costs exclude only borrowings that specifically finance qualifying assets that are still under development or construction. Borrowings that were intended to specifically finance qualifying assets that are now ready for their intended use or sale - or any non-qualifying assets - are included in that general pool. The amendments are not likely to have material impact on the Company’s financial statements.
(c) Amendments to IAS 19, ‘Employee Benefits’ on plan amendment, curtailment or settlement, (effective
for periods beginning on or after January 01, 2019). These amendments require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of the asset ceiling. The Company is yet to assess the full impact of this amendment on its financial statements..
(d) IFRIC 23, ‘Uncertainty over Income Tax Treatments’: (effective for periods beginning on or after January 01, 2019). This IFRIC clarifies how the recognition and measurement requirements of IAS 12 ‘Income taxes’, are applied where there is uncertainty over income tax treatments. The IFRIC explains how to recognize and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be accepted by the tax authority. The IFRIC applies to all aspects of income tax accounting where there is an uncertainty regarding the treatment of an item, including taxable profit or loss, the tax bases of assets and liabilities, tax losses and credits and tax rates. The Company is yet to assess the full impact of the interpretation on its financial statements.
3. Critical accounting estimates and judgements
The preparation of financial statements in conformity with approved accounting standards requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amount of assets, liabilities, income and expenses. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Judgments, estimates and assumptions made by the management that may have a significant risk of material adjustments to the financial statements in the subsequent years are as follows:
(a) Property, plant and equipment
The Company reviews appropriateness of the rates of depreciation, useful lives and residual values for calculation of depreciation on an on-going basis. Further, where applicable, an estimate of recoverable amount of asset is made if indicators of impairment are identified.
(b) Stores & spares and stock-in-trade
The Company estimates the net realizable value of stores & spares and stock-in-trade to assess any diminution in the respective carrying values. Net realizable value is determined with reference to estimated selling price less estimated expenditure to make sale.
(c) Provision for impairment of trade debts
Impairment losses related to trade and other receivables, are calculated using simplified approach of expected credit loss model. Management used actual credit loss experience over past years for the calculation of
30
expected credit loss. Trade and other receivables are written-off when there is no reasonable expectation of recovery.
(d) Staff retirement benefits - gratuity
The present value of this obligation depends on a number of factors that is determined on actuarial basis using a number of assumptions. Any change in these assumptions will impact carrying amount of this obligation. The present value of the obligation and underlying assumptions are stated in note 10 to these financial statements.
(e) Income taxes
In making the estimates for income taxes, the Company takes into account the current income tax laws and decisions taken by appellate authorities on certain issues in the past. There may be various matters where the Company's view differs with the view taken by the income tax department at the assessment stage and where the Company considers that its view on items of a material nature is in accordance with the law. The difference between the potential and actual tax charge, if any, is disclosed as a contingent liability.
4. CHANGE IN ACCOUNTING POLICY DUE TO ADOPTION OF NEW ACCOUNTING STANDARDS
The following changes in accounting policies have taken place effective from October 01, 2018.
4.1 IFRS 15 'Revenue from Contracts with Customers’
4.1.1 Following the application of IFRS 15, the Company policy for revenue recognition under different contracts with customers stands amended as follows:
Sale of Goods
The Company sold its products in separately identifiable contacts. The contracts entered into with the customers generally includes one performance obligation i.e. the provision of goods to the customer.
Revenue from local sale of goods is recognized when the Company satisfies a performance obligation under a contract by transferring promised goods to the customer. Goods are considered to be transferred at the point in time when the customer obtains control over the goods (i.e. on dispatch of goods from the mills to the customer). Revenue from the export sale of goods is recognized at the point in time when the customer obtains control over the goods dependent on the relevant incoterms of shipment. Generally it is on the date of bill of lading or at the time of delivery of goods to the destination port.
Return on Bank deposits
Return on bank deposits / interest income is recognized using applicable effective interest rate. Income is accrued as and when the right to receive the income establishes.
4.1.2 Effect of change in accounting policy
The Company has applied IFRS 15 using the modified retrospective approach for transition. This approach requires entity to recognize the cumulative effect of initially applying IFRS 15 as anadjustment to the opening balance of unappropriated profit in the period of initial application. The
As previously
reported
Effect on statement of
financial position
As at September 30, 2018
Trade and other payable 366,796 (49,151) 317,645
Contract liabilities -
49,151 49,151
As at October 01, 2017
Trade and other payable 558,230 (281,995)
276,235
Contract liabilities - 281,995 281,995
Re-statement As-restated
- - - - - - - Rupees in ‘000 - - - - - -
31
above mentioned revised policy do not have any significant impact on these financial statements as the revised policy do not have an impact on the timing or the amount of revenue recognition from the contracts with customers.
However, the adoption of IFRS 15 resulted in reclassification of "Advance payments from customers",
previously grouped under trade and other payables, to the statement financial position as 'Contract liabilities'. The affect of which is presented below:
4.2 IFRS 9 'Financial Instruments’
This standard addresses the classification, measurement and recognition of financial assets and financial liabilities and replaces the related guidance in IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through profit or loss and fair value through other comprehensive income. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with irrevocable option at the inception to present changes in fair value in other comprehensive income, with no recycling. For financial liabilities, there are no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. Following the application of IFRS 9, the Company policy for financial instrument stands amended as follows:
4.2.1 Financial assets
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those to be measured at amortized cost.
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
Initial recognition and measurement of financial assets.
All financial assets are recognized at the time when the Company becomes a party to the contractual provisions of the instrument. Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the profit or loss.
32
Equity instruments
The Company subsequently measures all equity investments at fair value for financial instruments quoted in an active market, the fair value corresponds to a market price (level 1).
For financial instruments that are not quoted in an active market, the fair value is determined using valuation techniques including reference to recent arm’s length market transactions or transactions involving financial instruments which are substantially the same (level 2), or discounted cash flow analysis including, to the greatest possible extent, assumptions consistent with observable market data (level 3).
- Fair value through other comprehensive income (FVTOCI).
Where the Company’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are not reported separately from other changes in fair value. Reclassification of fair value gains and losses to unappropriated profits shall be made with in statement of changes in equity.
- Fair value through profit or loss (FVTPL)
Changes in the fair value of equity investments at fair value through profit or loss are recognized in other income in the statement of profit or loss as applicable.
Dividends from such investments continue to be recognized in profit or loss as other income when the Company’s right to receive payments is established.
Debt Instruments
Subsequent measurement of debt instrument depends on the Company's business model for managing the assets and the cash flows characteristics of the assets. Three categories in which the Company classifies its debt instruments are:
- Amortized cost
Debt instruments that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair value through other comprehensive income (FVTOCI)
Debt instruments that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVTOCI.
- Fair value through profit or loss (FVTPL)
Debt instruments that do not meet the criteria for amortized cost or FVTOCI are measured at FVTPL.
Gains and losses arising on debt instrument measured at amortized cost and as FVTPL are recognized in profit or loss. Interest calculated under effective interest method, dividend, impairment and foreign exchange gains and losses on these debt instrument are also recognized in profit or loss. Gains and losses from changes in fair value of debt instruments measured as FVTOCI are recognized in other comprehensive income and are reclassified to profit or loss on derecognition or reclassification.
33
Derecognition of financial assets
Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
4.2.2 Financial liabilities
Financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities at amortized costs are initially measured at fair value minus transaction costs. Financial liabilities at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the profit or loss.
4.2.3 Impairment of financial assets
The adoption of IFRS 9 has also changed the accounting for impairment losses for financial assets by replacing the incurred losses model approach with a forward looking expected credit loss (ECL) approach. The Company assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at FVTOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Further, applying the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade and other receivables. Impairment losses related to trade and other receivables, are presented separately in the statement of profit or loss. Trade and other receivables are written off when there is no reasonable expectation of recovery. Management used actual credit loss experience over past years to base the calculation of ECL. Based on the Company’s experience, collection history, historical loss rates / bad debts and normal receivable aging, the shift from an incurred loss model to an ECL model has no material impact on the financial position and / or financial performance of the Company.
4.2.4 Impacts of adoption of IFRS 9 on these financial statements
With the application of IFRS 9 the Company's management has assessed which business model applies to the financial assets held by the Company at the date of initial application of the accounting standard and has reclassified its financial instruments into appropriate categories as required under IFRS 9.
For detailed revised classification of financial instruments refer note 35.7 to these financial statements.
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in the preparation of these financial statements are set-out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
5.1 Borrowings and borrowing costs
Borrowings are recognised initially at fair value.
Borrowing costs are recognised as an expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs, if any, are capitalised as part of the cost of that asset.
5.2 Staff retirement benefits
(a) Defined contribution plan
The Company is operating a provident fund scheme for all its permanent employees; equal monthly
34
contribution to the fund is made at the rate of 10% of the basic salaries both by the employees and the Company. The assets of the Fund are held separately under the control of the Trustees.
(b) Defined benefit plan
The Company operates an un-funded retirement gratuity scheme for its eligible employees. Provision for gratuity is made annually to cover obligation under the scheme in accordance with the actuarial recommendations. Latest actuarial valuation was conducted on September 30, 2019 on the basis of the projected unit credit method by an independent Actuary.
The liability recognised in the statement of financial position in respect of retirement gratuity scheme is the present value of defined benefit obligation at the end of reporting period. The amount arising as a result of remeasurements are recognised in the statement of financial position immediately, with a charge or credit to other comprehensive income in the periods in which they occur.
5.3 Trade and other payables
Liabilities for trade and other payables are carried at their amortised cost, which approximates fair value of the consideration to be paid in future for goods and services received, whether or not billed to the Company.
5.4 Obligation under Operating leases / Ijarah
Operating leases / Ijarah in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases / Ijarah. Payments made during the year are charged to the statement of profit and loss.
5.5 Taxation
(a) Current and prior year
Provision for current year's taxation is determined in accordance with the prevailing law of taxation on income enacted or substantially enacted by the reporting date and is based on current rates of taxation being applied on the taxable income for the year, after taking into account, tax credits and rebates available, if any. The tax charge also includes adjustments, where necessary, relating to prior years which arise from assessments finalised during the year.
(b) Deferred
Deferred tax is recognised using the statement of financial position liability method on all temporary differences between the carrying amounts of assets and liabilities for the financial reporting purposes and the amounts used for taxation purposes.
Deferred tax asset is recognised for all the deductible temporary differences only to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilised. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax liabilities are recognised for all the taxable temporary differences.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is charged or credited in the statement of profit or loss, except in the case of items credited or charged to other comprehensive income / equity in which case it is included in other comprehensive income / equity.
35
5.6 Property, plant and equipment
(a) Operating fixed assets
Operating fixed assets are stated at cost less accumulated depreciation and any identified impairment loss except freehold land, which is stated at cost. Cost of some items of plant & machinery consists of historical cost and exchange fluctuation effects on foreign currency loans capitalised during prior years.
Depreciation is taken to statement of profit or loss applying reducing balance method so as to write-off the depreciable amount of an asset over its remaining useful life at the rates stated in note 16.1. The assets' residual values and useful lives are reviewed at each financial year-end and adjusted if impact on depreciation is significant. Depreciation on additions to operating fixed assets is charged from the month in which an asset is acquired or capitalised while no depreciation is charged for the month in which the asset is disposed-off.
Normal repairs and replacements are taken to statement of profit or loss. Major improvements and modifications are capitalised and assets replaced, if any, other than those kept as stand-by, are retired.
Gain / loss on disposal of property, plant and equipment, if any, is taken to statement of profit or loss.
(b) Capital work-in-progress
This is stated at cost. All expenditure connected to the specific assets incurred during installation and construction period are carried under capital work-in-progress. These are transferred to specific assets as and when assets are available for use.
(c) Assets subject to finance lease
Leases where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Assets subject to finance lease are initially recognised at the lower of present value of minimum lease payments under the lease agreements and the fair value of assets. Subsequently these assets are stated at cost less accumulated depreciation and any identified impairment loss.
The related rental obligations, net of finance charges, are included in liabilities against assets subject to finance lease. The liabilities are classified as current and long-term depending upon the timing of payment.
Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the balance outstanding. The interest element of the rental is taken to statement of profit or loss over the lease term.
Depreciation on assets subject to finance lease is charged to income at the rate stated in note 16.1 applying reducing balance method to write-off the cost of the asset over its estimated remaining useful life in view of certainty of ownership of assets at the end of lease period.
Depreciation on additions to leased assets is charged from the month in which an asset is acquired while no depreciation is charged for the month in which the asset is disposed-off.
Finance cost and depreciation on leased assets are taken to statement of profit or loss.
5.7 Investment property
Property not held for own use or for sale in the ordinary course of business is classified as investment property. The Company uses cost model for valuation of its investment property; freehold land has been carried at cost whereas buildings on freehold land have been carried at cost less accumulated depreciation and any identified impairment loss.
36
Depreciation on buildings is taken to statement of profit or loss on reducing balance method at the rate stated in note 17. Depreciation on additions to investment property is charged from the month in which an asset is acquired while no depreciation is charged for the month in which the asset is disposed-off.
5.8 Financial assets
Initial measurement
The Company classifies its financial assets in the following three measurement categories:
- fair value through other comprehensive income (FVTOCI);
- fair value through profit or loss (FVTPL); and
- measured at amortized cost.
A financial asset is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition.
Subsequent Measurement
- Equity Instruments at FVTOCI
These assets are subsequently measured at fair value. Dividends are recognized as income in the statement of profit or loss. Other net gains and losses are recognized in statement of other comprehensive income and are never reclassified to the statement of profit or loss.
- Debt Instruments at FVTOCI
These assets are subsequently measured at fair value. Interest / mark-up income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in the statement of profit or loss. Other net gains and losses are recognized in statement of other comprehensive income. On derecognition, gains and losses accumulated in statement of other comprehensive income are reclassified to the statement of profit or loss.
- Debt Instruments at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interest / mark-up or dividend income, are recognized in the statement of profit or loss.
- Financial Assets measured at amortised cost
These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest / mark-up income, foreign exchange gains and losses and impairment are recognized in the statement of profit or loss.
Derecognition
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
37
5.9 Derivative, financial instruments and hedging activities
Derivatives are recognized initially at fair value, attributable transaction costs are recognized in statement of profit or loss when incurred.
5.10 Loans and advances
These are stated at amortised cost.
5.11 Stores, spares and loose tools
Stores, spares and loose tools are stated at the lower of cost and net realisable value. The cost of inventory is based on moving average cost. Items in transit are stated at cost accumulated to the reporting date. Adequate provision is made against slow moving / obsolete items after taking into account a reasonable estimate of salvage value.
5.12 Stock-in-trade
Basis of valuation are as follows:
Mode of valuation
- At lower of weighted average cost and net
realisable value.
- At net realisable value
- At lower of cost and net realisable value.
Particulars
Raw materials - molasses:
- purchased
- own produced
Finished goods
Work-in-process - At cost.
- Cost in relation to finished goods and work-in-process represents the annual average manufacturing cost, which consists of prime cost and appropriate production overheads.
- Net realisable value signifies the selling price in the ordinary course of business less cost necessary to be incurred to effect such sale.
5.13 Trade debts and other receivables
Trade debts and other receivables are classified as financial assets at amortised cost according to IFRS 9. Under IAS 39, trade and other receivables were previously classified as loans and receivables.
These are classified at amortized cost and are initially recognised and measured at fair value of consideration receivable. The Company uses simplified approach for measuring the expected credit losses for all trade and other receivables including contract assets based on lifetime expected credit losses. The Company has estimated the credit losses using a provision matrix where trade receivables are grouped based on different customer attributes along with historical, current and forward looking assumptions. Debts considered irrecoverable are written off.
5.14 Cash and cash equivalents
Cash at banks and short term deposits, which are held to maturity are carried at cost. For the purposes of cash flow statement, cash equivalents are short term highly liquid instruments which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in values.
38
5.15 Impairment
(a) Financial assets
The Company assesses on a forward looking basis the expected credit loss (ECL) associated with its financial assets. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Further, the Company followed simplified approach to measuring ECL which uses a lifetime expected loss allowance for all trade and other receivables. Management used actual credit loss experience over past years for the calculation of ECL.
(b) Non-financial assets
The carrying amounts of the Company's non-financial assets are reviewed at each reporting date to identify circumstances indicating occurrence of impairment loss or reversal of provisions for impairment losses. If any indications exist, the recoverable amounts of such assets are estimated and impairment losses or reversals of impairment losses are recognized in the statement of profit or loss. Reversal of impairment loss is restricted to the original cost of the asset.
5.16 Financial liabilities
Classification & subsequent measurement
Financial liabilities are classified as measured at amortized cost or 'at fair value through profit or loss' (FVTPL). A financial liability is classified as at FVTPL if it is classified as held for trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in the statement of profit or loss.
Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in the statement of profit or loss. Any gain or loss on derecognition is also recognized in the statement of profit or loss.
Derecognition
Financial liabilities are derecognized when the contractual obligations are discharged or cancelled or have expired or when the financial liability's cash flows have been substantially modified.
5.17 Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Revenue is measured at the fair value of consideration received or receivable on the following basis:
(a) revenue from sale of goods is recognized at the point of time when the customer obtains control of the goods, which is generally at the time of delivery / dispatch of goods to customers;
(b) revenue from the export sale of goods is recognized at the point in time when the customer obtains control over the goods dependent on the relevant incoterms of shipment. Generally it is on the date of bill of lading or at the time of delivery of goods to the destination Port;
(c) Dividend income is accounted for when the right of receipt is established; and
(d) return on bank deposits / interest income is recognized using applicable effective interest rate. Income is accrued as and when the right to receive the income establishes.
6.1 The voting rights, board selection, right of first refusal and block voting are in proportion to the shareholding of shareholders.
6. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
71,879 71,879
5,000 5,000
Ordinary shares of Rs.10 each
fully paid in cash
Ordinary shares of Rs.10 each
issued to a financial institution on
conversion of loan
Ordinary shares of Rs.10 each
issued as fully paid bonus shares 88,296 88,296
165,175 165,175
2019 2018
--- Rupees in '000 ---
8,829,624
16,517,453 16,517,453
8,829,624
7,187,829
500,000
7,187,829
20182019
(No. of shares)
500,000
39
5.18 Foreign currency transactions
Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at the dates of the transactions. All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the reporting date. Foreign exchange gains and losses on translations are recognized in the statements of profit or loss. Forward foreign exchange contracts if any are measured at fair value which is calculated by reference to current forward foreign exchange rates with similar maturity profiles. The unrealized gain if any is included in equity and realized gains /losses are included in the income statement currently. All non-monetary items are translated into rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined.
5.19 Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
5.20 Off-setting of financial assets and liabilities
Financial assets and liabilities are off-set and the net amount is reported in the financial statements only when there is a legally enforceable right to set-off the recognised amounts and the Company intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
5.21 Segment reporting
A segment is a distinguishable component within the Company that is engaged in providing products which are subject to risks and returns that are different from those of other business segments.
5.22 Dividend and appropriation to reserves
Dividend distribution to the Company's shareholders and appropriation to reserves are recognised in the period in which these are approved.
8. LONG TERM FINANCE
Balance as at September 30, 8.1
Less: Current portion grouped under current liabilities
(including an overdue instalment of Rs.37.500 million)
262,500 300,000
112,500
75,000
150,000 225,000
2019 2018
--- Rupees in '000 ---RESERVES
Capital reserve - share premium
Revenue reserve - general
7.Note
7.1 This represents share premium received on 5,687,829 right ordinary shares issued during the financial year ended September 30, 2006 at the rate of Rs.30 per share adjusted by bonus shares issued.
119,217
130,000
249,217
119,217
130,000
249,217
7.1
9. LIABILITY AGAINST ASSETS SUBJECT TO FINANCE LEASE
From one
to five years
Upto one
year
From one to five years
TotalUpto one
yearTotal
Particulars
2019 2018
7,549 15,046 22,595 2,700
7,245 9,945
2,041 1,753 3,794 661 678 1,339
5,508 13,293 18,801 2,039 6,567 8,606
-
3,496 3,496 -
1,789 1,789
Minimum lease payments
Less: finance cost allocated
to future periods
Less: security deposit adjustable
on expiry of lease terms
Present value of minimum lease
payments 5,508 9,797 15,305 2,039 4,778 6,817
---------------------------------- Rupees in 000 -------------------------------
40
8.1 The Company has obtained a demand finance facility of Rs.300 million from MCB bank Limited to finance BMR of sugar and distillery units. This finance facility carries mark-up at the rate of 6 month KIBOR + 175bps per annum and is repayable in 8 equal semi annual instalments of Rs.37.500 million each commenced from March, 2019. Effective mark-up rate charged by the bank, during the current financial year, ranged from 9.95% to 15.66% (2018: 8.27% to 9.95%) per annum. This finance facility is secured against first pari passu charge of Rs.400 million on present and future plant and machinery of the Company with 25% margin.
9.1 The Company has acquired five vehicles from Al-Baraka Bank (Pakistan) Limited against Diminishing Musharakah finance facilities of Rs.32 million. The liabilities under these arrangements are repayable in 60 monthly instalments commenced from November, 2016 and carry profit at the rate of 6 months KIBOR + 300bps per annum; effective profit rates charged by the bank, during the current financial year, ranged from 13.88% to 16.91% (2018: 9.21% to 10.04%) per annum. The Company intends to exercise its option to purchase the vehicles upon completion of lease term. The liabilities are secured against title of vehicles in the name of the bank.
- discount rate
- expected rate of increase in salary
2019
12.50%
7.50%
2018
9.00%
8.00%
10.2 The amount recognised in the statement of financial position is present value of defined benefit obligation at reporting date.
9.2 The Company, during the current financial year acquired five vehicles from Askari Bank Limited against lease finance facility of Rs.10 million. The liability under this arrangement is repayable in 36 monthly instalments commenced from November, 2018 and carries profit at the rate of 6-months KIBOR + 200bps per annum; effective profit rate charged by the bank, during the current financial year, ranged from 11.72% to 15.13% per annum. The Company intends to exercise its option to purchase the vehicles upon completion of lease term. The liability is secured against title of vehicles in the name of the bank.
10. STAFF RETIREMENT BENEFITS - Gratuity
10.1 Projected unit credit method, as allowed under IAS 19 (Employee Benefits), has been used for actuarial valuation based on the following significant assumptions:
2019 2018
--- Rupees in '000 ---
43,991
5,954
3,806
38,668
4,763
2,886
The movement in the present value of defined
benefit obligation is as follows:
Balance at beginning of the year
Current service cost
Interest cost
(2,302)
(2,880)
(258)
(3,149)
Benefits due but not paid (transferred
2,856(4,418)
45,926 43,991
Remeasurement of obligationBalance at end of the year
to short term liabilities)
Benefits paid
(4,345) 67
(73) 2,789
(4,418) 2,856
Remeasurements recognised in other
comprehensive income
10.4
Actuarial (gain) / loss
Experience adjustments
Charge to statement of profit or loss:10.3
9,760 7,649
5,954 4,763
3,806 2,886
Current service cost
Interest cost
10.5 Comparison of present value of defined benefit obligation and experience adjustment on obligation for five years is as follows:
45,926 43,991 38,668 35,626 33,326Present value of defined
benefit obligation
Experience adjustmenton obligation (4,418) 2,856 1,640 1,053 (21,815)
--------------- Rupees in '000 ---------------
2019 2018 2017 2016 2015
41
11.1
3,045
14,703
1,057
2,302
205
317,645
4,252
14,939
1,057
258
187
354,220
Income tax deducted at source
Workers' (profit) participation fund
Workers' welfare fund
Gratuity payable
Others
11. TRADE AND OTHER PAYABLES
Creditors
Advance payments
Retention money
Sales tax payable
Accrued expenses
Note
189,214
26,773
1,575
48,963
29,808
2019 2018
--- Rupees in '000 ---
226,106
16,707
1,327
57,318
32,069
Increase in
assumptions
Decrease in
assumptions
------ Rupees in '000 ------
Discount rate
Increase in salaries
(42,788)
49,580
49,499
(42,664)
10.6 Sensitivity analysis for actuarial assumptions:
The calculation of defined benefit obligation is sensitive to assumptions set-out above. The following table summarizes how defined benefit obligation would have increased / (decreased) as a result of change in respective assumption by 1 percent.
Expected maturity analysis of undiscounted obligation is as follows:
Time in years
1
2
3
4
5
6 - 10
11 and onwards
Rupees in '000'
3,083
5,294
6,033
5,732
5,334
61,374
715,573
10.7 The Company's contribution to scheme for the financial year 2020 is expected to be Rs.12.048 million.
10.8 Gratuity payable includes liability in respect of key management personnel aggregated Rs.1.682 million (2018: Rs.1.007 million).
42
Note
2019 2018
--- Rupees in '000 ---
13.1 Short term finance facilities available from various commercial banks under mark-up arrangements aggregate to Rs.4.390 billion (2018: Rs.4.000 billion). These finance facilities, during the current financial year, carried mark-up at the rates ranging from 3.00% to 15.91% (2018: 3.00% to 10.01%) per annum. Facilities available for opening letters of credit and guarantees aggregate to Rs.594.190 million (2018: Rs.178.900 million) of which facilities aggregating Rs.515.113 million (2018: Rs.162.094 million) remained unutilised at the reporting date. The aggregate finance facility are secured against charge over plant & machinery, pledge of refined sugar in bags, charge over current assets, equitable mortgage over land & building of the Company and lien over import & export documents. These facilities are expiring on various dates by May, 2020.
13.2 These have arisen due to issuance of cheques in excess of balance at bank accounts at year-end.
12. ACCRUED MARK-UP
Mark-up accrued on:
- long term finances
- short term finances
13.1
13. SHORT TERM FINANCES
Running / cash finances - secured
Temporary bank overdraft - unsecured 13.2
17,904
55,214
73,118
2,401,266
1,187
2,402,453
12,576
55,372
67,948
2,385,600
478
2,386,078
11.1 Workers' (profit) participation fund - the Fund
Balance at beginning of the year
Add: - profit earned on the Fund's balances
maintained in a PLS bank account
- allocation for the year
- interest on funds utilised by the Company
Less: payment made during the year
Balance at end of the year
112
14,338
1,678
(15,892)
14,939
14,703
10,469
19
14,213
1,833
(11,831)
14,703
43
8Long term finance
Liability against assets
subject to finance lease 9
Note14. CURRENT PORTION OF
NON-CURRENT LIABILITIES
2019 2018
- - Rupees in '000 - -
112,500 75,000
5,508 2,039
118,008 77,039
15. CONTINGENCIES AND COMMITMENTS
Contingencies
15.1 On an interim order of the High Court of Sindh, Karachi, sale certificate has been issued to the Company in respect of factory / plant known as Northern Chemicals and the Company has paid stamp duty on land it purchased. It was held that in case the Court comes to a conclusion that the Company is liable to pay stamp duty on plant and machinery as well, the Company shall pay the same within fifteen days from decision of appeal. In this regard, the Company has provided a bank guarantee in favour of Nazir of High Court of Sindh for an amount of Rs.2.400 million.
15.2 An appeal is pending before the Lahore High Court (LHC) against the order of the Customs, Central Excise & Sales Tax Appellate Tribunal (the Tribunal) in the matter of permit fee amounting Rs.5.994 million.
15.3 A reference application under section 47(1) of the Sales Tax Act, 1990 (the Act) is pending before the LHC against confirmation of original order by the Tribunal whereby the Company was ordered to pay sales tax demands aggregating Rs.3.083 million.
15.4 An appeal under section 47 of the Act is also pending before the LHC against judgment of the Tribunal whereby the Company was ordered to pay dues aggregating Rs.4.991 million.
15.5 An appeal before the LHC, against judgment of the Tribunal, is pending; the Tribunal has upheld the judgment of the Additional Collector whereby the Company was ordered to pay demands aggregating Rs.1.400 million.
15.6 Provisions for cane quality premium payable to growers aggregating Rs.79.335 million, related to different yearly notifications issued by the Government of the Punjab (GoP) for fixation of cane support price and quality premium above 'bench mark average recovery', made during the financial years 1981-82 to 1994-95 were written-back during the financial year ended September 30, 2006. The management is of the view that no outflow of resources will be required as a result of judgment by the LHC for the cases pending adjudication, as LHC has judged this levy as unconstitutional in similar cases.
Presently, the intra-court appeals of the GoP are pending for a fresh decision by the LHC. Earlier, the Supreme Court of Pakistan had set aside the LHC's judgment of dismissal of review application filed by the GoP.
15.7 A writ petition is pending before the LHC against decision of the Board of Trustees of Employees Old-age Benefits Institution; the Institution has raised demand amounting Rs.3.394 million. The Company, as per order of the LHC, has deposited Rs.381 thousand during May, 2011.
15.8 The Company, during the financial year 2002, had filed an appeal before the Tribunal against the order of the Additional Collector (Central Excise), Faisalabad rejecting the refund claim of the Company amounting Rs.15.117 million. The Company had paid this amount under protest as customs duty on the sale of sugar. The appeal is pending adjudication.
15.9 The GoP, during the financial year 2012, imposed a duty @ Rs.2 per litre on manufacturing of spirit. The Company has filed an appeal before the LHC against the imposition of duty which is pending adjudication. However, on an interim order of the LHC the Company provided a bank guarantee in favour of excise and taxation department for an amount of Rs.1.000 million.
During the financial year ended September 30, 2017, the LHC passed another interim order and directed the
Company to deposit the amount of provincial excise duty in cash with deputy registrar of the court on
44
45
16.1
PROPERTY, PLANT AND EQUIPMENT
Operating fixed assets
Capital work-in-progress 16.5
Note
Not later than one year
Later than one year but not later than five years
1,452,618
26,031
1,478,649
3,583
4,416
7,999
2,747
4,328
7,075
1,124,636
225,813
1,350,449
16.
2019 2018
- - Rupees in '000 - -
monthly basis till the final order. In compliance with this interim order the Company has deposited Rs.120.771 million till September 30, 2019. Based on the advice of the Company's legal counsel this amount has been booked as receivable as there are meritorious grounds for the case to be decided in favour of the Company and the amount be refunded. Further, the GoP vide its notification no.SO(E&M)2-5/2018/ED has withdrawn this duty with effect from August 05, 2019 and the LHC has released the bank guarantee submitted by the Company.
15.10 The Irrigation Department of the GoP, during the financial year 2015, has raised demand aggregated Rs.6.810 million based on its notification dated June 12, 2014, for the revision of rates for supply of water to the Company. The Company, against the said demand, has filed an appeal in the Civil Court, which is pending adjudication.
15.11 During the preceding financial year, the Honourable Supreme Court of Pakistan took Su motu action due to non-payment of sugarcane price to the farmers / growers by the sugar mills vide Su motu Case No. 9 of 2018. During the current financial year, the Court has dismissed the case vide its order dated February 12, 2019, on the grounds that the sugarcane mills have already admitted their liability to the growers, which has been settled and paid.
15.12 The Company has filed a writ petition before the LHC challenging a notice received from the Excise & Taxation Office, Sargodha demanding excise duty amounted Rs.3.366 million on account of waste of rectified sprit during transit. The LHC vide its interim order dated December 19, 2018 has suspended the notice and has directed the Company to furnish a bank guarantee for an equal amount in favour of deputy registrar of the LHC till the final order of the Court.
Commitments
15.13 Commitments in respect of capital expenditure other than letters of credit at the year-end aggregate to Rs.4.790 million (2018: Rs.8.000 million).
15.14 Commitments for irrevocable letters of credit outstanding at the year-end aggregate to Rs.Nil (2018: Rs.3.651 million).
15.15 Guarantees given by a commercial bank on behalf of the Company to Sui Northern Gas Pipelines Limited, Engro Fertilizer Limited and Faisalabad Electric Supply Company, outstanding as at September 30, 2019, aggregate to Rs.73.312 million (2018: Rs.10.392 million).
15.16 The Company has entered into Ijarah arrangements for three vehicles with MCB Islamic Bank Limited. Aggregate commitments for rentals under Ijarah arrangements as at September 30, 2019 are as follows:.
46
6,30
624
,652
263,
212
2,12
7,51
947
121
,518
840
14,8
8012
2,38
27,
579
9,91
78,
937
56,9
395,
554
1,74
921
,146
12,8
832,
706,
484
-2,
996
97,8
1417
9,82
2-
4223
53,
709
10,7
89-
367
904,
209
--
--
300,
073
--
--
--
--
(194
)-
(178
)(2
08)
(3,5
08)
--
--
(4,0
88)
--
-(8
,034
)-
--
--
--
--
--
--
(8,0
34)
6,30
627
,648
361,
026
2,29
9,30
747
121
,560
1,07
518
,589
132,
977
7,57
910
,106
8,81
957
,640
5,55
41,
749
21,1
4612
,883
2,99
4,43
5
6,30
627
,648
361,
026
2,29
9,30
747
1
21,5
60
1,07
5
18,5
89
132,
977
7,57
9
10,1
06
8,81
9
57,6
405,
554
1,74
921
,146
12,8
832,
994,
435
-26
37,5
7436
5,21
7-
-
-
126
43,7
60
-
7,14
4
316
197
2,75
0-
15,1
4015
,539
487,
789
--
--
--
-
-
-
-
-
-
(6,7
82)
--
--
(6,7
82)
6,30
627
,674
398,
600
2,66
4,52
447
121
,560
1,07
518
,715
176,
737
7,57
917
,250
9,13
551
,055
8,30
41,
749
36,2
8628
,422
3,47
5,44
2
-12
,183
178,
113
1,38
3,04
744
713
,125
723
8,58
210
0,08
16,
734
7,21
17,
139
37,8
294,
761
1,14
32,
908
2,93
71,
766,
963
-67
311
,765
80,2
923
1,01
129
872
4,23
285
413
174
5,45
919
860
2,73
62,
487
110,
489
--
--
--
-
-
(1
23)
-
(81)
(100
)(3
,485
)-
--
-(3
,789
)
--
-(3
,864
)-
-
-
-
-
-
-
-
--
--
-(3
,864
)
-12
,856
189,
878
1,45
9,47
545
014
,136
752
9,45
410
4,19
06,
819
7,54
37,
213
39,8
034,
959
1,20
35,
644
5,42
41,
869,
799
-12
,856
189,
878
1,45
9,47
545
014
,136
752
9,45
410
4,19
06,
819
7,54
37,
213
39,8
034,
959
1,20
35,
644
5,42
41,
869,
799
-74
120
,180
113,
174
289
132
926
9,39
276
1,14
518
14,
440
321
542,
893
5,23
215
9,68
0
--
--
--
--
--
--
(6,6
55)
--
--
(6,6
55)
-13
,597
210,
058
1,57
2,64
945
215
,027
784
10,3
8011
3,58
26,
895
8,68
87,
394
37,5
885,
280
1,25
78,
537
10,6
562,
022,
824
6,30
614
,792
171,
148
839,
832
217,
424
323
9,13
528
,787
760
2,56
31,
606
17,8
3759
554
615
,502
7,45
91,
124,
636
6,30
614
,077
188,
542
1,09
1,87
519
6,53
329
18,
335
63,1
5568
48,
562
1,74
113
,467
3,02
449
227
,749
17,7
661,
452,
618
CO
ST
Bal
ance
as
at O
ctob
er 0
1, 2
017
Add
ition
s du
ring
the
yea
r
Dis
posa
ls d
urin
g th
e ye
ar
Wri
tten
-off
duri
ng t
he y
ear
Bal
ance
as
at S
epte
mbe
r 30
, 201
8
Bal
ance
as
at O
ctob
er 0
1, 2
018
Add
ition
s du
ring
the
yea
r
Dis
posa
ls d
urin
g th
e ye
ar
Bal
ance
as
at S
epte
mb
er 3
0, 2
019
DE
PR
EC
IAT
ION
Bal
ance
as
at O
ctob
er 0
1, 2
017
Cha
rge
for
the
year
On
disp
osal
s du
ring
the
yea
r
On
wri
tten
-off
duri
ng t
he y
ear
Bal
ance
as
at S
epte
mbe
r 30
, 201
8
Bal
ance
as
at O
ctob
er 0
1, 2
018
Cha
rge
for
the
year
On
disp
osal
s du
ring
the
yea
r
Bal
ance
as
at S
epte
mb
er 3
0, 2
019
BO
OK
VA
LUE
AS
AT
SEPT
EMB
ER 3
0, 2
018
BO
OK
VA
LUE
AS
AT
SE
PT
EM
BE
R 3
0, 2
019
Dep
reci
atio
n r
ate
(%)
510
1012
1210
1015
1015
1025
2510
1525
Lab
ora
tory
equ
ipm
ent
Veh
icle
sp
roje
ctC
olo
ny
Fac
tory
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
-- R
up
ees
in '0
00 -
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
--
equ
ipm
ent
inst
alla
tio
ns
& fi
ttin
gs
Tub
e-w
ell
equ
ipm
ent
and
fixt
ure
sV
ehic
les
trac
tors
equ
ipm
ent
ho
ld
lan
dm
ach
iner
y
Wo
rksh
op
equ
ipm
ent
wei
ghb
rid
ges
Leas
ed--
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Ow
ned-
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
-
Tota
l
Bu
ildin
gs o
n f
reeh
old
lan
dP
ow
er
Oth
er
Ele
ctri
c O
ffice
Fu
rnit
ure
F
arm
Far
m
Free
P
lan
t an
d
Sca
les
&
16.1
O
pera
tin
g fi
xed
ass
ets
- t
an
gib
le
47
16.2 Free-hold land of the Company is located at different areas in Bhalwal, district Sargodha comprising in total 1,001,426 square yards.
16.4 Depreciation for the year has been
apportioned as under:
Cost of sales
Distribution and marketing expenses
Administrative expenses
16.5 Capital work-in-progress
Buildings on freehold land:
- colony
- factory
- office
Plant and machinery
Electric installations & fittings
2019 2018
147,110 100,517
417 383
12,153 9,589
159,680 110,489
1,116 26
517 22,398
20,061 -
4,337 186,210
- 17,179
26,031 225,813
--- Rupees in '000 ---
5,400 5,334 66 600 534
1,382 1,321 61 500 439
Negotiation
- - do - -
6,782 6,655 127 1,100 973
4,088 3,789 299 1,087 788
Mode of disposal
------------------------- Rupees in '000 -----------------------
CostAccumulated
depreciationNet book
value
Sale
proceedsGain
16.3 Operating fixed assets disposed - off
Vehicles
Mercedes Benz
Honda Civic
September 30, 2018
Asset description
48
17. INVESTMENT PROPERTY
------------ Rupees in '000 -------------
6,730
-
6,730
Freehold
land
5,609
4,405
1,204
Buildings on
freehold land
12,339
4,405
7,934
Total
Year ended September 30, 2018
Opening book value
Depreciation charge for the year
Closing book value
At September 30, 2018
Cost
Accumulated depreciation
Book value
Year ended September 30, 2019
Opening book value
Depreciation charge for the year
Closing book value
At September 30, 2019
Cost
Accumulated depreciation
Book value
Depreciation rate (%)
6,730
6,730
-
6,730
6,730
-
6,730
6,730
-
6,730
6,730
-
1,144
5,609
4,465
1,144
1,144
57
1,087
5,609
4,522
1,087
5
1,204
60
7,874
12,339
4,465
7,874
7,874
57
7,817
12,339
4,522
7,817
7,934
60
At October 1, 2017
Cost
Accumulated depreciation
Book value
17.1 Depreciation for the year has been grouped under other expenses (note 30).
17.2 Free-hold land is located at Garden block, Garden Town, Lahore. Area is 8,675 square yards.
17.3 Fair value of the investment property, based on the management's estimation, as at September 30, 2019 was Rs.250.000 million (2018: Rs.245.000 million).
2019 2018
--- Rupees in '000 ---
3,038 910
1,053 550
1,985 360
Loans / advances to employees
Less: current portion grouped
under current assets
49
18.1 These interest free loans and advances are recoverable in instalments which vary from case to case.
18.2 These loans are secured against lien on provident fund / gratuity balances of employees.
19. STORES, SPARES AND LOOSE TOOLS
Stores - including in-transit valuing
Rs.Nil (2018: Rs.33.557 million)
Spares
Loose tools
Less: provision for slow moving items
19.1 The movement in balance of provision
for obsolescence is as follows:
Opening balance
Provision made / (reversed) during the year
Closing balance
2019 2018Note
Note
48,692 58,567
59,679 54,723
610 620
108,981 113,910
19.1 12,729 11,955
96,252 101,955
11,955 12,649
774 (694)
12,729 11,955
--- Rupees in '000 ---
19.1.1 Stores and spares inventory includes slow moving items valuing Rs.25.459 million (2018: Rs.23.911 million). The management estimates that slow moving items carry salvage value approximating to 50% of the book value. Provision against slow moving items to the extent of 50% of their carrying value has been made in the books of account.
20. STOCK-IN-TRADE
Raw materials - molasses
Work-in-process:
- Sugar
- Molasses
Finished goods:
- Sugar
- Spirit
Other stocks - fair price shop and depot
21. TRADE DEBTS
2019 2018
--- Rupees in '000 ---
78,364
8,938
6,394
15,332
981,693
71,609
1,053,302
290
1,147,288
95,765
5,803
802
6,605
1,814,884
80,044
1,894,928
244
1,997,542
Local - unsecured
Foreign - secured
421,184
258,572
679,756
39,553
-
39,553
21.1
50
21.1 These include an amount of Rs.4.710 million (2018: Rs.Nil) receivable from Fauji Foods Limited (a related party). The aggregate maximum outstanding balance at the end of any month during the year was Rs.11.056 million (2018: Rs. Nil).
22. LOANS AND ADVANCES - considered good
Advances to:
- key management personnel
- other employees
- suppliers
Recoverable from growers
Current portion of long term loans and advances
Letters of credit
Note
22.1
2019 2018
--- Rupees in '000 ---
- 800
4,787 5,625
363,427 81,137
55,388 15,233
1,053 550
6,904
6,761
431,559 110,106
22.1 During the preceding financial year, the Company advanced an amount of Rs.1.000 million to Mr. Ejaz Ahmed (General Manager (cane)) for construction of his house. The amount has been recovered during the current year.
Note
15.9
23.1
23. OTHER RECEIVABLES
Claims receivable - considered good
Excise duty receivable
Export subsidy
Others 23.2
3,915
120,771
11,845
55,344
191,875
--- Rupees in '000 ---
2019 2018
3,915
88,227
106,030
38,058
236,230
23.1 This represents freight support subsidy on export of sugar receivable from federal government.
23.2 This mainly includes Rs.52.745 million (2018: Rs.33.153 million) receivable from Faisalabad Electric Supply Company against sale of electricity.
Note
24.1
24.2
24. BANK BALANCES
Cash at commercial banks on:
- current accounts
- saving accounts
- margin accounts
- dividend accounts
Cash at Cooperative Societies on current accounts
Less: provision for impairment 24.3
2019 2018
--- Rupees in '000 ---
26,955
20,766
58,606
58,606
3,780
7,105
745
745
-
26,350
9,982
3,400
6,276
46,008
745
745
-
46,008
51
24.1 Saving accounts, during the current financial year, carried profit / mark-up at the rates ranging from 3.75% to 11.25% (2018: 3.75% to 5.50%) per annum.
24.2 These represent 100% cash margin deducted by banks against guarantees issued on behalf of the Company.
24.3 As the recoverability of balances with Cooperative Societies is doubtful due to their closure by the Government of Pakistan; therefore, provision has been made to meet the potential eventuality.
25.1 This includes sugar export subsidy amounted Rs.48.649 million (2018: Rs.158.863 million).
25.2 All the contracts were under one performance obligation and revenue has been recognized at the point of time when the goods have been transferred to the customers.
3,973,345 4,804,172 192,757 211,845 4,166,102 5,016,017
306,911 288,153 -
-
- -
792,776 709,483 1,225,144 1,130,291 2,017,920 1,839,774
5,073,032 5,801,808 1,417,901 1,342,136 6,184,022 6,855,791
25. SALES - Net
Local
Inter-segment (note 26.2)
Export (note 25.1)
Less:
- sales tax 482,660 550,012 30,143 32,303 512,803 582,315
4,590,372 5,251,796 1,387,758 1,309,833 5,671,219 6,273,476
------------------------- Rupees in '000 ------------------------
2019 2018
Sugar
2019 2018
Distillery
2019 2018
Total
26. COST OF SALES
Raw materials
consumed 3,004,908 4,575,454
Inter-segment
transfers (note 26.1) -
-
3,004,908 4,575,454
Salaries, wages and
benefits (note 26.2) 115,862 114,117
Fuel and power 30,741 14,078
Chemicals and
stores consumed 65,482 74,588
Repair and maintenance 110,915 98,900
Depreciation 107,382 85,440
Insurance 6,832 5,033
Rates and taxes 943 397
Others 10,256 10,029
3,453,321 4,978,036
2019 2018 2019 2018 2019 2018
Sugar Distillery Total
------------------------- Rupees in '000 ------------------------
378,613 274,673 3,383,521 4,850,127
306,911 288,153 - -
685,524 562,826 3,383,521 4,850,127
40,873 34,370 156,735 148,487
25,891 18,660 56,632 32,738
23,755 23,681 89,237 98,269
7,975 10,353 118,890 109,253
39,728 15,077 147,110 100,517
2,189 1,457 9,021 6,490
87 36 1,030 433
437 2,644 10,693 12,673
826,459 669,104 3,972,869 5,358,987
52
2019 2018 2019 2018 2019 2018
Sugar Distillery Total
------------------------- Rupees in '000 ------------------------Adjustment of
work-in-process
Opening 5,803 9,146
Closing (8,938) (5,803)
(3,135) 3,343
Cost of goods
manufactured 3,450,186 4,981,379
Adjustment of
finished goods
Opening stock 1,814,884 1,981,349
Closing stock (981,693) (1,814,884)
833,191 166,465
4,283,377 5,147,844
802 4,127 6,605 13,273
(6,394) (802) (15,332) (6,605)
(5,592) 3,325 (8,727) 6,668
820,867 672,429 3,964,142 5,365,655
80,044 110,095 1,894,928 2,091,444
(71,609) (80,044) (1,053,302) (1,894,928)
8,435 30,051 841,626 196,516
829,302 702,480 4,805,768 5,562,171
26.1 Inter-segment sales and purchases have been eliminated from the total figures.
26.2 These include Rs.1,045 thousand (2018: Rs.1,019 thousand) and Rs.5,963 thousand (2018: Rs.4,745 thousand) in respect of provident fund contributions and staff retirement benefits - gratuity respectively.
27.1 These include Rs.14 thousand (2018: Rs.16 thousand) and Rs.103 thousand (2018: Rs.79 thousand) in respect of provident fund contributions and staff retirement benefits - gratuity respectively.
27. DISTRIBUTION AND MARKETING EXPENSES
Salaries and benefits (note 27.1)
Loading, unloading, freight and export expenses
Rent of storage tanks
Depreciation
Commission
Others
------------------------- Rupees in '000 ------------------------
2,285 2,137
36,163 6,929
-
-
417 383
4,109 2,781
819 8,189
43,793 20,419
9
47,775
15,375
-
-
-
63,159
-
72,860
11,175
-
-
10
84,045
2,294
83,938
15,375
417
4,109
819
106,952
2,137
79,789
11,175
383
2,781
8,199
104,464
2019 2018
Sugar
2019 2018
Distillery
2019 2018
Total
53
28. ADMINISTRATIVE EXPENSES2019 2018 2019 2018 2019 2018
Salaries and benefits (note 28.1) 70,020 64,684 23,340 21,562 93,360 86,246
Travelling and conveyance
including directors'
travelling amounting
Rs.251 thousand
(2018: Rs.1,080 thousand) 1,315 1,135 438 378
Vehicles' running and maintenance 9,929 7,513 3,310 2,504
Communication 2,100 1,196 787 478
Printing and stationery 697 1,013 232 337
Rent, rates and taxes 3,381 2,843 1,398 1,448
Insurance 667 577 222 193
Repair and maintenance 1,878 1,990 719 684
Subscription 4,668 1,872 4,168 1,090
Advertisement 95 241 92 80
Depreciation 8,787 5,757 3,366 3,832
Entertainment / guest house expenses 3,771 3,159 1,428 1,153
Auditors' remuneration (note 28.2) 1,103 964 368 321
Legal and professional
Charges (other than Auditors') 3,788 1,771 1,391 1,590
Utilities 4,538 2,574 1,513 858
Others 723 1,025 224 387
117,460 98,314 42,996 36,895
Sugar Distillery Total
------------------------- Rupees in '000 ------------------------
1,753
13,239
2,887
929
4,779
889
2,597
8,836
187
12,153
5,199
1,471
5,179
6,051
947
160,456
1,513
10,017
1,674
1,350
4,291
770
2,674
2,962
321
9,589
4,312
1,285
3,361
3,432
1,412
135,209
28.1 These include Rs.342 thousand (2018: Rs.318 thousand) and Rs.3,694 thousand (2018: Rs.2,826 thousand) in respect of provident fund contributions and staff retirement benefits-gratuity respectively.
28.2 Auditors' remuneration
ShineWing Hameed Chaudhri & Co.
- statutory audit fee
- half yearly review
- certification charges
- out-of-pocket expenses
Javaid Jalal Amjad & Co. - provident fund's
2019 2018
--- Rupees in '000 ---
1,100 1,050
210 150
50 50
35 35
1,395 1,285
76
-
1,471 1,285
28.3 Administrative expenses, which are not separately identifiable, have been allocated on the basis of management's estimation.
54
31. FINANCE COST
11.1
Mark-up / profit on:
- long term finances
- short term finances
- lease finances
- workers' profit participation fund
Bank and other charges
32. TAXATION - Net
Provision for current year
31,889
293,838
5,449
1,678
7,666
340,520
47,015
26,607
204,021
830
1,833
18,364
251,655
59,399
29. OTHER INCOME
Income from financial assets
Unclaimed and other payable balances written-back
Interest / mark-up on saving accounts
Income from other than financial assets
Scrap sales - net
Bagasse and press mud sales - net
Sale of electricity
Gain on disposal of operating fixed assets
Reversal of provision for slow moving stores
and spares inventory
Rental income
Others
Note
11,329 302
1,429 987
1,018 1,784
4,509 36,636
29.1 16,873 27,427
16.3 973 788
19.1 -
694
155
-
180 102
36,466 68,720
2019 2018
--- Rupees in '000 ---
29.1 This represents sale of electricity to Faisalabad Electric Supply Company.
17
19.1
11.1
30. OTHER EXPENSES
Donations (without directors' interest)
Depreciation on investment property
Exchange uctuation loss
Operating fixed assets written-off
Provision made for slow moving stores
and spares inventory
Workers' profit participation fund
200
57
6,288
-
774
14,338
21,657
70
60
-
4,170
-
14,213
18,513
2019 2018
--- Rupees in '000 ---Note
55
32.1 Income tax assessments of the Company have been finalised upto Assessment Year 2002-03 under section 62 of the repealed Income Tax Ordinance, 1979 whereas Tax Years 2003 to 2018 have been assessed under the self assessment scheme envisaged in section 120 of the Income Tax Ordinance, 2001 (the Ordinance).
32.2 Income tax return for tax year 2019 has not been filed by the Company in the light of directions given by the LHC vide its interim order dated December 09, 2019. The Company has filed a writ petition before the LHC challenging the vires of amendments brought to section 65B of the Ordinance through the Finance Act, 2019.
32.3 No numeric tax rate reconciliation has been presented in these financial statements as provisions made during the current and preceding financial year mainly represent minimum tax payable under section 113 and final tax deducted at source on realisation of foreign exchange proceeds under section 154, after adjusting tax credit available under section 65B of the Ordinance.
32.4 Deferred tax asset arising on unused tax losses has not been recognised in these financial statements due to uncertainty about the availability of taxable profits in the foreseeable future.
33. EARNINGS PER SHARE - Basic and Diluted
Profit after taxation attributable
to ordinary shareholders
Weighted average number of ordinary shares
outstanding during the year
Earnings per share
33.1 There is no dilutive effect on the basic earning per share of the Company.
2019 2018
225,317 210,785
16,517,453 16,517,453
13.64 12.76
--- Rupees in '000 ---
---- No. of shares ----
------- Rupees -------
34. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
2019 2018 2019 2018 2019 2018
Executives
------------------------------ Rupees in '000 ------------------------------
Directors
Executive Non-Executive
5,400 9,244 4,800 6,800 - - 10,632 9,990
- 727 -
-
649 694
- -
62
1,822
273 126 265 325
100 19
Managerial
remuneration
including bonus
Perquisites and
benefits:
Utilities
Medical
Entertainment /
club bills - - 120 153 85 - - -
62 2,549 393 279 999 1,019 100 19
5,462 11,793 5,193 7,079 999 1,019 10,732 10,009
No. of persons 1 2 1 1 1 1 3 3
Particulars2019 2018
Chief Executive
56
34.1 The working directors and executives have been provided with free use of the Company maintained cars and telephones at their residences. Furnished residences have also been provided to the executives in the Mills' Colony.
34.2 A sum of Rs.Nil (2018: Rs.789 thousand) was incurred on the renovation of Chief Executive's residence.
34.3 During the current financial year, meeting fees of Rs.590 thousand (2018: Rs.420 thousand) were paid to three (2018: two) Non-executive directors of the Company.
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
35.1 Financial Risk Factors
The Company has exposure to the following risks from its use of financial instruments:
- market risk - credit risk; and- liquidity risk
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board is also responsible for developing and monitoring the Company's risk management policies.
The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance. Risk management is carried out by a treasury department under policies approved by the Board of Directors. The treasury department identifies, evaluates and hedges financial risks. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as currency risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of excess liquidity.
35.2 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Market risk comprises of three types of risks: currency risk, interest rate risk and price risk.
(a) Currency risk
Foreign currency risk arises mainly where receivables and payables exist due to transactions entered into in foreign currencies. The Company is exposed to currency risk on import of stores & spares and export of goods mainly denominated in US Dollars and Euros. As at reporting date, the Company is not exposed to any significant currency risk.
(b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash ows of a financial instrument will uctuate because of change in market interest rates. At the reporting date, the interest rate profile of the Company's interest bearing financial instruments is as follows:
57
Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through the statement of profit or loss. Therefore, a change in interest rate at the reporting date would not affect profit or loss of the Company.
Cash ow sensitivity analysis for variable rate instruments
At September 30, 2019, if interest rate on variable rate financial liabilities had been 1% higher / lower with all other variables held constant, profit after taxation for the year would have been Rs.26.791 million (2018: Rs.26.924 million) lower / higher mainly as a result of higher / lower interest expense on variable rate financial liabilities.
(c) Price Risk
Price risk is the risk that the fair value or future cash ows of a financial instrument will uctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instruments or its issuer or factors affecting all similar financial instruments traded in the market. The Company is not exposed to any significant price risk.
35.3 Credit risk exposure and concentration of credit risk
Credit risk represents the risk of a loss if the counter party fails to discharge its obligation and cause the other party to incur a financial loss. The Company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific counterparties and continually assessing the credit worthiness of counterparties.
Concentration of credit risk arises when a number of counterparties are engaged in similar business activities or have similar economic features that would cause their abilities to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentration of credit risk indicates the relative sensitivity of the Company's performance to developments affecting a particular industry.
Credit risk primarily arises from deposits, trade debts, loans & advances, other receivables and balances with banks. To manage exposure to credit risk in respect of trade debts, management performs credit reviews taking into account the customer's financial position, past experience and other relevant factors. Where considered necessary, advance payments are obtained from certain parties. Export sales made to major customers are secured through letters of credit. Credit risk on bank balances is limited as the counter parties are banks with reasonably high credit ratings.
3,780 9,982
262,500 300,000
2,401,266 2,385,600
15,305 6,817
3.75 - 11.25 3.75 - 5.50
9.95 - 15.66 8.13 - 9.95
3.00 - 15.91 3.00 - 10.01
9.97 - 16.91 9.21 - 10.04
Fixed rate instruments
Financial assets
Bank balances
Variable rate instruments
Financial liabilities
Long term finance
Short term borrowings
Liability against assets subject
to finance lease
--- Rupees in '000 ---% %
2019 2018
Effective rate
2019 2018
Carrying amount
58
2019 2018
Security deposits 3,879 11,933
Trade debts 679,756 39,554
Loans and advances 63,213 21,768
Other receivables 59,259 41,973
Bank balances 58,606 46,008
864,713 161,236
--- Rupees in '000 ---
Domestic
Export
2019 2018
--- Rupees in '000 ---
421,184 39,554
258,572 -
679,756 39,554
The maximum exposure to credit risk for trade debts at the reporting date by geographic region is as follows:
In respect of other counter parties, due to the Company's long standing business relationship with them, management does not expect non-performance by these counter parties on their obligations to the Company.
Exposure to credit risk
The maximum exposure to credit risk as at September 30, 2019 along with comparative is tabulated below:
2019 2018
--- Rupees in '000 ---
562,007
117,749
679,756
36,683
2,871
39,554
Not yet due
Past due - more than 30 days
The aging of trade debts at the date of statement of financial position was as follows:
Based on the working, the management believes that no impairment loss allowance is necessary in respect of trade debts as debts aggregating Rs.521.559 million have been realised subsequent to the year-end and for other trade debts there are reasonable grounds to believe that the amounts will be realised in short course of time.
35.4 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach for managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
59
The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to contractual maturity dates. The amounts disclosed in the table are the contractual undiscounted cash ows:
September 30, 2019
Long term finance 262,500 323,445 144,131 179,314
Liability against assets
subject to finance lease 15,305 19,099 7,549 11,550
Trade and other payables 259,947 259,947 259,947 -
Accrued mark-up 73,118 73,118 73,118 -
Short term finances 2,401,266 2,451,516 2,451,516 -
Unclaimed and
unpaid dividends 7,898 7,898 7,898 -
3,020,034 3,135,023 2,944,159 190,864
Carrying
amount
Contractual
cash ows
Less than 1
year
Between 1 to
5 years
------------------- Rupees in '000 -------------------
Between 1 to
5 years
Less than 1
year
Carrying
amount
Contractual
cash ows
------------------- Rupees in '000 -------------------
September 30, 2018
Long term finances 300,000 366,426 102,233
Liability against assets
subject to finance lease 6,817 8,156 2,700
Trade and other payables 223,104 223,104 223,104
Accrued mark-up 67,948 67,948 67,948
Short term finances 2,385,600 2,429,138 2,429,138
Unclaimed and
unpaid dividends 7,069 7,069 7,069
2,990,538 3,101,841 2,832,192
264,193
5,456
-
-
-
-
269,649
The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest / mark-up rates effective at the respective year-ends. The rates of interest / mark-up have been disclosed in the respective notes to these financial statements.
35.5 Fair value of financial instruments
Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. Underlying the definition of fair value is the presumption that the Company is a going concern and there is no intention or requirement to curtail materially the scale of its operation or to undertake a transaction on adverse terms.
60
35.6 Valuation techniques used to determine fair values
Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. These instruments are included in Level 1.
Level 2: The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to measure the fair value of an instrument are observable, the instrument is included in Level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
At September 30, 2019, the carrying values of all financial assets and liabilities reected in the financial statements approximate to their fair values.
36. CAPITAL RISK MANAGEMENT
The Company's objective when managing capital are to ensure the Company's ability not only to continue as a going concern but also to meet its requirements for expansion and enhancement of its business, maximize return of shareholders and optimize benefits for other stakeholders to maintain an optimal capital structure and to reduce the cost of capital.
In order to achieve the above objectives, the Company may adjust the amount of dividends paid to shareholders, issue new shares through bonus or right issue or sell assets to reduce debts or raise debts, if required.
Loans and advances
Security deposits
Trade debts
Loans and advances
Other receivables
Bank balances
1,985 360
3,879 11,933
679,756 39,553
68,132 28,169
191,875 236,230
58,606 46,008
1,004,233 362,253
35.7 Financial instruments by category
Long term finance 262,500 300,000
15,305 6,817
Trade and other payables 259,947 223,104
Accrued mark-up 73,118 67,948
Short term finances 2,402,453 2,386,078
Unclaimed and
unpaid dividends 7,898 7,069
3,021,221 2,991,016
Liability against assets
subject to finance lease
Financial liabilities measured at amortised
cost
2019 2018Financial liabilities
as per the statement
of financial position —--- Rupees in '000 ---
Financial assets
as per the statement
of financial position
2019 2018
--- Rupees in '000 ---
Loans and
advances
Amortised
cost
61
Balance as at October 01, 2018 300,000 6,817 2,386,078
Changes from financing activities
Finances obtained - - 16,375
Finances repaid (37,500) - -
Lease liability obtained - 8,488 -
7,069
-
-
-
Dividends paid - - - (42,116)
Dividend declared - - - 42,945
Total changes from financing cash ows 262,500 15,305 2,402,453 7,898
Other changes - - - -
Balance as at September 30, 2019 262,500
15,305
2,402,453 7,898
Liabilities
Long term
finances
Short term borrowings Dividend
---------------------- Rupees in '000 ----------------------
Liability against assets
subject to finance lease
37. RECONCILIATION OF MOVEMENT OF LIABILITES TO CASH FLOWS ARISING FROM FINANCIAL ACTIVITIES
Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. It is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (long term finances, liability against assets subject to finance lease and short term borrowings as shown in the statement of financial position) less bank balances. Total equity includes all capital and reserves of the Company that are managed as capital. Total capital is calculated as equity as shown in the statement of financial position plus net debt.
Total borrowings
Less: bank balances
Net debt
Total equity
Total capital
Gearing ratio
2,680,258 2,692,895
58,606 46,008
2,621,652 2,646,887
928,841 742,051
3,550,493 3,388,938
74% 78%
2019 2018
--- Rupees in '000 ---
62
39. SEGMENT INFORMATION
The Company's reportable segments are as follows:
- Sugar
- Distillery
Balance as at October 01, 2017 362,935 8,759 2,333,655 5,323
Changes from financing activities
Finances obtained - - 52,423 -
Finances repaid (62,935) - - -
Lease liability repaid - (1,942) - -
Dividends paid - - - (56,065)
Dividend declared - - - 57,811
Total changes from financing cash ows 300,000 6,817 2,386,078 7,069
Other changes - - - -
Balance as at September 30, 2018 300,000 6,817 2,386,078 7,069
………………… Rupees in 000 …………………
Long term
finances
Liability against assets
subject to finance lease
Short term
borrowingsDividend
Liabilities
38. CAPACITY AND PRODUCTION
Sugar Plant
Rated crushing capacity (based on 140
working days) M. Tons 1,400,000
Cane crushed M. Tons 1,008,944
Sugar produced M. Tons 98,655
Days worked Nos. 121
Sugar recovery
Distillery Plant
Rated capacity per day
Actual production
Days worked
1,400,000
630,929
63,098
102
% 9.7710.01
Litres 80,000130,000
Litres 22,241,99217,889,251
Nos. 216 310
20182019
63
39.1 Segment revenues and results Sugar Distillery Total
For the year ended
September 30, 2019
Sales 4,590,372 1,387,758 (306,911) 5,671,219
Cost of sales (4,283,377) (829,302) (306,911) (4,805,768)
Gross profit 306,995 558,456 -
865,451
Selling and distribution
expenses (43,793) (63,159) -
Elimination of inter
segment transactions
(106,952)
Administrative expenses (117,460) (42,996) -
(160,456)
(161,253) (106,155) -
(267,408)
Profit before taxation
and unallocated
income and expenses 145,742 452,301 - 598,043
Unallocatable income and expenses
Other income
Other expenses
Finance cost
Taxation
Profit for the year
36,466
(21,657)
(340,520)
(47,015)
225,317
------------------------------ Rupees in '000 -----------------------------
Sugar Distillery
Elimination of inter
segment transactions
Total
For the year ended
September 30, 2018
Sales 5,251,796 1,309,833 (288,153)
Cost of sales (5,147,844) (702,480) (288,153)
Gross profit 103,952 607,353 -
Selling and distribution
expenses (20,419) (84,045) -
Administrative expenses (98,314) (36,895) -
(118,733) (120,940) -
(Loss) / profit before taxation
and unallocated
income and expenses (14,781) 486,413 -
Unallocatable income and expenses
Other income
Other expenses
Finance cost
Taxation
Profit for the year
6,273,476
(5,562,171)
711,305
(104,464)
(135,209)
(239,673)
471,632
68,720
(18,513)
(251,655)
(59,399)
210,785
------------------------------Rupees in '000 -----------------------------
64
Sugar Distillery Total
3,082,051
413,247
926,523
23,466
39.2 Segment assets and liabilities
As at September 30, 2019
Segment assets
Unallocatable assets
Total assets as per the statement
of financial position
Segment liabilities
Unallocatable liabilities
Total liabilities as per the statement
of financial position
-------------Rupees in '000 ------------
4,008,574
202,880
4,211,454
436,713
2,845,900
3,282,613
3,249,683
352,676
625,048
68,638
As at September 30, 2018
Segment assets
Unallocatable assets
Total assets as per the statement
of financial position
Segment liabilities
Unallocatable liabilities
Total liabilities as per the statement
of financial position
Sugar Distillery Total
-------------Rupees in '000 ------------
3,874,731
105,418
3,980,149
421,314
2,816,784
3,238,098
Sales to domestic customers in Pakistan are 67.37% (2018: 73.16%) and to customers outside Pakistan are 32.63% (2018: 26.84%) of the revenues during the current financial year.
The Company sells its manufactured products to local and foreign companies, commission agents, organisations and institutions. Five (2018: seven) of the Company's customers contributed towards 89.36% (2018: 84.65%) of the local sales during the current financial year aggregating Rs.3.557 billion (2018: Rs.4.071 billion) which exceeds 10% of the local sales of the Company.
Geographical information
All segments of the Company are managed on nation-wide basis and operate manufacturing facilities and sale offices in Pakistan.
Special account in a
scheduled bank
Mutual fund
Deposits with a
scheduled bank
41.1 Break-up of the investment is as follows:
35.24 56.92
7.69 43.08
57.07 -
100.00 100.00
25,931
5,659
42,000
73,590
47,498
35,949
-
83,447
2019 2018
--- Percentage ---
2019 2018
--- Rupees in '000 ---
65
40. RELATED PARTY TRANSACTIONS
Related parties comprise of the Associated Companies, directors, major shareholders, key management personnel and entities over which the directors are able to exercise significant inuence on financial and operating policy decisions and employees’ retirement funds. The Company in the normal course of business carries out transactions with various related parties.
Key management personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the entity. The Company considers its Chief Executive, directors and all team members of its management team to be its key management personnel.
Detail of related parties (with whom the Company has transacted) along with the relationship and transactions with related parties, other than those which have been disclosed elsewhere in these financial statements, are as follows:
2019 2018
--- Rupees in 000---
14,110 -
21,386
28,881
1,354
- 1,000
94,803
104,200
73,590
83,447
77.62% 80.08%
73,590 83,447
(i) Size of the Fund
(ii) Cost of investments made
(iii) Percentage of investments made
(iv) Fair value of investments made
i) Associated Company due
to common directorship
Fauji Foods Limited
Sale of sugar
ii) Key management personnel
Salary and other employment benefits
Loan provided
iii) Retirement Fund
Contribution towards provident fund
41. DISCLOSURE RELATING TO PROVIDENT FUND
1,385
66
The figures are based on the un-audited financial statements of the Provident Fund (the Fund) as at September 30, 2019 and audited financial statements as at September 30, 2018. The investments out of provident fund have been made in accordance with the provisions of Section 218 of the Companies Act, 2017 and the rules formulated for this purpose.
The Fund's audit for the year ended September 30, 2018 has been carried-out by M/s. Javaid Jalal Amjad & Co., Chartered Accountants, CMA Colony, Abid Majeed Road, Lahore.
42. NUMBER OF EMPLOYEES
Average number of employees during the year
Number of employees at the September 30,
2019 2018
551 552
489 499
- - - - - - Number - - - - - -
43. SUBSEQUENT EVENT
The Board of Directors, in its meeting held on December 23, 2019 has proposed a final cash dividend of Rs.3.00 (2018: Rs.2.60) per share amounting to Rs.49.552 million (2018: Rs.42.946 million) for the year ended September 30, 2019. This appropriation will be approved by the members in the forthcoming Annual General Meeting to be held on January 25, 2020.
The financial statements for the year ended September 30, 2019 do not include the effect of the proposed appropriations, which will be accounted for in the financial statements for year ending September 30, 2020.
44. CORRESPONDING FIGURES
Corresponding figures have been reclassified wherever necessary to reect more appropriate presentation of events and transactions for the purpose of comparison in accordance with the accounting and reporting standards as applicable in Pakistan. However, no significant reclassification has been made in these financial statements.
45. DATE OF AUTHORISATION FOR ISSUE
These financial statements were authorised for issue on December 23, 2019 by the board of directors of the Company.
Lt Col ABDUL KHALIQ KHAN (Retd) Chief Executive Chief Financial Officer
RIZWAN SOHAIL Director
M. SOHAIL KHOKHAR
2.2
1,846 16,517,453
815
492
176
258
37
12
18
7 7 1 1
2
2 2 1
1
1
2
1
1
1
1
1
1
1
1
101
501
1,001
5,001
10,001
15,001
20,001 25,001 30,001 35,001 45,001 55,001
60,001 70,001 85,001
100,001
135,001
140,001
160,001
210,001
245,001
250,001
495,001
545,001
23,940
132,196
135,599
585,539
279,864
155,303
317,646
163,696
195,520
32,500
36,600
93,016
115,617
123,275
73,000
86,400
103,929
273,520
142,806
163,500
212,700
250,000
250,001
497,500
547,100
100
500
1,000
5,000
10,000
15,000
20,000
25,000
30,000
35,000 40,000 50,000 60,000
65,000
75,000
90,000
105,000
140,000
145,000
165,000
215,000
250,000
255,000
500,000
550,000
1
1
1
1
765,001
1,435,001
3,320,001
5,995,001
765,403
1,437,480
3,323,803
6,000,000
770,000
1,440,000
3,325,000
6,000,000
Incorporation No. :
Name of the Company :
2.1
1.1
Pattern of holding of the shares held by the shareholders as at 30-09-2019
67
AS AT SEPTEMBER 30, 2019
(Section 227(2)(f)
FORM 34
PATTERN OF SHAREHOLDING
68
3,418,339
765,403
29,447
1,448
Chief Executive Officers,
and their spouse and minor children
2.3.1 Directors,
2.3.2 Associated Companies,
undertakings and related
parties. (Parent Company)
2.3 Categories of shareholders
2.3.3 NIT and ICP
3,732
-
2.3.4 Banks Development
Financial Institutions, Non
Banking Financial Institutions.
9,384,695
2.3.5 Insurance Companies
2.3.6 Modarabas and Mutual
Funds
2.3.7 Share holders holding 10%
or more
2.3.8 General Public
9,000,773
466
a. Local
b. Foreign
1,819,201
2,039
1,437,592
39,013
20.6953%
4.6339%
0.1783%
0.0088%
0.0226%
0.0000%
56.8168%
54.4925%
0.0028%
11.0138%
0.0123%
8.7035%
0.2362%
2.3.9 Others (to be specified)
Joint Stock Companies
Pension Funds
Foreign Companies
Others
SYED ANWAR ALI
COMPANY SECRETARY
35200-2711479-3
Signature of
Company Secretary
Name of Signatory
Designation
CNIC Number
Date 30 09 2019
Share held Percentage
69
2020.
(also being a member of the Company) as my/ our proxy to attend, act and vote for me/ us and on my/ our thbehalf, at the 57 Annual General Meeting of the Company to be held on Saturday, January 25, 2020 at 66
Garden Block, New Garden Town, Lahore at 11:30 a.m. and at any adjournment thereof.
2020 25
2020
VIDEO CONFERENCE FACILITY FORM
Shareholder’s Signature Date: CNIC #: (copy attached)
I / We ______________________________________ being the member of Noon Sugar Mills Limited, holder
of___________________________________________Ordinary share(s) as per registered folio No.
______________________hereby opt for video conference facility at ______________________________ .
Signature of Member _____________________ Date __________________
Bank Account Details of Shareholder for payment of Cash Dividend through Electronic Mode:
I hereby wish to communicate my desire to receive my dividend directly in my bank account as detailed below:
Name of Shareholder: ____________________________________
Folio Number: ____________________________________
Bank Account No: ____________________________________
IBAN: ____________________________________
Title of Account: ____________________________________ Name of Bank: ____________________________________
Branch/full mailing address: ______________________________________________________________
______________________________________________________________________________________ It is stated that the above information is correct to the best of my knowledge and shall keep the company informed in case of any changes in the above particulars in future.
BANK ACCOUNT DETAIL FORM
74
75
76
77
78
79
Company
80
81
82